In Praise Of Whole Life Insurance

Author: Donald Lusan
Source: articleage.com

Whole life insurance even though it is not the least expensive
life insurance policy you can buy can still fulfill the needs of
some. Why some people have such an aversion to this policy I
will never understand. Term insurance is also good insurance and
can fit into more situations than whole life because of the low
cost. More people can afford it. Both types of life insurance
serve the same purposes, however, when you buy whole life
insurance you get some additional benefits that term life
insurance does not provide. Let us take a look at the whole life
insurance policy and it’s benefits.

Level Premium

Whole life insurance has a fixed level premium which never
increases for as long as you own the policy. When you pay a
whole life premium a portion goes to pay for the death benefit
and a portion is applied to cash values. In the initial years a
portion of the premium is also applied to administrative costs.

Death Benefit

Like any other life insurance policy the whole life insurance policy has a guaranteed death
benefit which can be paid either in one lump sum or in the form
of a monthly income. This death benefit is usually paid free of
federal income taxes. There are several income options including
a life income, an income for a fixed predetermined period and an
income for a fixed amount. The insurance can also keep the
principal and just pay the interest. The principal is paid upon
demand.

Cash Values

The whole life insurance policy contains a guaranteed cash value
which accumulates tax deferred. If you are ever in need of cash
you may borrow from your cash value. You don’t need to tell the
insurance company why you want the money and you pay back the
money at your convenience.

Dividends

Cash values earn dividends which depend on the performance of
the company. these dividends are not guaranteed. They can be
taken in cash, can be left to accumulate interest, can be use to
reduce premiums or they can be used to purchase paid up
additions. Paid up additions on a whole life insurance policy is
a fully paid up whole life policy. These paid up additions have
cash values and also earn dividends.

There are many riders you can add to your whole life insurance
policy. The two main riders are the waiver of premium benefit
and the accidental death benefit rider also known as the double
indemnity rider.

Waiver Of Premium.

If the insured should become disabled, any time after six months
of disability the life insurance company will step in and pay
the premiums even if the disability lasts for the lifetime of
the insured.

Accidental Death Benefit

If the insured person should die in an accident, for example an
automobile accident, the life insurance company will pay twice
the death benefit. If you have a policy for $100,000, and you
have the accidental death benefit rider, the insurance company
will pay $200,000 to your beneficiary.

The above benefits may be worth the extra premium you would pay
for a whole life insurance policy.