So, you are thinking about taking out a Whole Life Insurance policy, but you also aren’t sure if it is the right policy for your situation? Life insurance can be daunting. There are so many different insurers and policies available that make it difficult to fully grasp what different types of life insurance truly offer.
Just like Term Life Insurance, Whole Life Insurance has its own advantages and disadvantages. Understanding what they are and how they would impact your specific situation can help you decide if Whole Life Insurance is right for you.
Whole Life Insurance Summary
With Whole Life Insurance, the policy provides coverage that lasts for the extent of the insured’s lifetime. Therefore, no matter when the insured passes away, the beneficiaries are guaranteed to receive a payout from the insurer as long as the premiums are paid and the policy isn’t surrendered.
Pros of Whole Life Insurance
One advantage of Whole Life Insurance is that it is permanent. If premiums are always paid, this type of policy can last for the extent of the insured’s lifetime. This lifetime coverage can offer considerable peace of mind.
Another advantage of Whole Life Insurance is that the premium amount remains constant throughout the duration of the policy. Premiums being fixed can be useful especially when it comes to budgeting for monthly expenses.
The major advantage of Whole Life Insurance is the cash value component of the policy. This cash value component is effectively a living benefit for the policy holder, as it can be borrowed against for other expenses. Whole Life Insurance, therefore, acts as an investment that can grow with time.
Cons of Whole Life Insurance
Whole Life Insurance is expensive, especially when compared to Term Life Insurance. The premiums that the policy holder will pay with a Whole Life Insurance policy are considerably higher than the premiums they would pay for a Term Life Insurance policy.
Whole Life Insurance is also complex, and therefore it can be difficult to fully understand. There are many potential benefits associated with a Whole Life Insurance policy, but those benefits can be difficult to realize without getting financial assistance from a professional.
Lastly, a Whole Life Insurance policy will offer a lower death benefit than a Term Life Insurance policy. This can be surprising to many considering the higher premiums that policy holders pay for Whole Life Insurance.
The peace of mind and permanence that Whole Life Insurance offers may make it the right choice for many. Understanding the pros and cons associated with Whole Life Insurance can help you decide if it is the right option for you.