Whole life insurance definition - pros and cons
There are a lot of choices when it comes to picking out the perfect insurance policy, and for many using this whole life insurance definition can come in very handy. This article will provide you with some background, but ultimately, you'll have to sit down with your insurance agent and rate the pros and cons of the various life insurance policy features.
So, you may be asking, just what is a whole life insurance policy? I'm glad you asked. Whole life means precisely that, it covers the death benefit of the insured for their whole life. To illustrate: a term policy is only good for a specific number of years. Once the term expires the policy is no longer good. To continue the coverage you'll have to either continue the policy or get a new policy.
With whole life insurance the insurance doesn't expire... until you do. Another aspect of whole life insurance definition is that it can also act as an investment. You will pay a certain amount of your premium towards the death benefit and the rest will go to the investment portion of the policy.
The premium portion that goes to the death benefit will not go up during your lifetime so you'll always know just what you'll have to pay.
Within the whole life insurance there are three main options. The basic difference between them is how you will pay your premiums as well as what level of access you will have to the investment portion of your policy. There are policies that will allow you to access some of the cash value of your policy for things like a down payment on a home. There can be an impact on your taxes so make sure that you take all of those factors into consideration.
Another thing you will have to consider is how you want to pay your premiums. Some whole life policies will give you the option to only pay premiums until you reach a certain age or pay over a specific number of years. Of course, that basically means you'll be paying the same amount over a shorter time frame so your premiums will be higher. If that's not a problem for you, it might just be a good option.
A great benefit of whole term policies is that the policy is a sort of tax shelter. You won't have to pay taxes on the cash value of the policy as long as the policy is in force. Since you can save on taxes, while earning interest this type of policy is a two for one: tax shelter and investment.
There are a lot of benefits to choosing a whole life policy, still it's not the best choice for everyone. It's very important that you carefully weigh all the considerations, the pros and cons of various forms of insurance before you pull out your checkbook. Step one should probably be to meet with you insurance agent so they can fill in all the blanks and offer you more information on a whole life insurance definition.
Article Source: Messaggiamo.Com
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