A Quick Guide to a Whole Life Insurance Policy
Did you know that only 52% of Americans have life insurance? We don't like to think about it, but there will be a day when we pass away and leave behind those we love.
Before that happens, you need to make sure they'll be taken care of once you die. And the way to do so is through a good life insurance policy.
If you don't already have one, then you need to take action fast. An option you have is a whole life insurance policy, which we'll explore more in this article.
What Is a Whole Life Insurance Policy?
As the name suggests, whole life insurance applies to your entire lifespan. It's considered a permanent policy, whereas on the other hand, term life insurance is temporary.
With a whole life insurance policy, your beneficiaries will get a guaranteed fixed death benefit. While you're alive, the cash value keeps growing, so long as you keep paying your premiums.
To get a policy, you need to go through a medical exam in most cases. Your eligibility will be determined by your gender, age, medical history, and lifestyle, as well as your employment information.
Do note there are no-exam life insurance alternatives available too. If you're found ineligible by multiple insurers, this might be something to consider.
The Coverage
Of course, there's a death benefit.
Your loved ones will get a tax-free lump-sum death benefit when you pass away. This money can be used for various things, such as debt settlements and your funeral and burial. Usually, the minimum coverage is $100,000, but it's common to see coverage of $1 million or even more.
There's also the cash value that's guaranteed (as long as you pay your premiums). It's basically an investment and savings account you can use while you're alive. The money available is funded through part of your premium payments.
You can purchase insurance riders. Considering that your policy can expire at its maturity date (when you turn either 100 or 120), this extends that date.
Don't Confuse It With Infinite Banking
Infinite banking is very similar to whole life insurance. What is infinite banking? It's basically where you become your own banker.
With infinite banking, you use your whole life insurance policy as your bank. It's a great way to build wealth in an alternative way. Do note that it takes time to do so; it's definitely not a "get rich quick" scheme.
Speak to an Agent About Whole Life Insurance
If after reading this article, you feel a whole life insurance policy is right for you, it's best to speak to an insurance agent. They'll be able to walk you through your options and find a policy that works for you.
But don't put this important task off. The sooner you get your affairs in order, the better. You'll have peace of mind knowing your loved ones will be taken care of, even when you're gone.
Check out the rest of our blog for more information about finances.