How To Secure Your Future With a Whole Life Insurance Policy?
Published On Nov 05, 2021 10:00 AM By InsuranceDekho
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As you learn more about life insurance, you’re likely to find that many policies for instance, whole life insurance have more than just a death benefit. In fact, whole life insurance is primarily about a death benefit for the people who depend on you, it can also become an important part of a financial plan through the benefits life insurance can provide while you’re alive.
What Are The Benefits Of Whole Life Insurance?
Here are some of the key things you should know. Top 4 benefits of a whole life insurance policy.
1. Whole Life Insurance Never Expires
One of the most appealing benefits of purchasing a whole life insurance policy is this: As long as you pay your premiums, your death benefit will never expire. It is guaranteed to be paid regardless of when you die, whether that’s tomorrow, in five years, 80 years or even further away. That’s a key difference between whole life insurance and a term life insurance policy, which will only pay the death benefit if you pass away during the window of time (or term) that your policy covers.
2. Premiums on whole life policies stay the same
Premiums are the monthly payments that you make to an insurance company to pay for your policy. Whether you have a whole life or another kind of insurance policy, you will be required to pay premiums. Some types of insurance policies may require you (or allow you) to adjust your premiums over time. But the premiums that you pay for your whole life insurance policy are guaranteed to remain fixed and consistent for as long as you have your policy. Your premium also contributes to your cash value.
3. Whole Life Insurance Builds Cash Value
Cash value is one of the key living benefits of whole life insurance. A portion of every premium payment you make is added to your policy’s cash value, which accumulates slower in the early years of the policy. That becomes money that you can access at any time for any reason.1 Since it’s guaranteed never to go down, it can become an important, stable part of your financial plan.
4. Whole Life Policies Can Earn Dividends
In addition to guaranteed cash value growth, many life insurance companies pay dividends. While you can take dividends as cash or use them to pay a portion or all of your premium, many people reinvest them in their policies. That can allow your death benefit and cash value to accumulate even more quickly.
What Are The Tax Advantages From Whole Life Insurance?
Life insurance has several key tax advantages. The death benefit is tax-free. Also, you can borrow against your cash value perhaps to ride out a market downturn in retirement without paying taxes as long as the loans are repaid properly.
Additionally, the cash value growth (in addition to growth through dividends) is tax-deferred; you will only owe tax on the growth if you surrender your policy and take out the money. You can always take the amount you paid in premiums tax-free.
As you can see, in addition to its guaranteed death benefit, whole life insurance can become a financial asset that you can use throughout your lifetime. These so-called “living benefits” of whole life insurance: the cash value your policy accumulates can make a whole life insurance policy one of the most flexible parts of your financial plan.
You may also like to read - 5 Ways A Term Insurance Plan Can Benefit You
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.