Whole Life Insurance - The Living Benefits
You may be considering buying life insurance and are comparing the different types of life insurance. There are many different types of life insurance that provide a death benefit to your beneficiaries to provide the protection you need. They may all provide a death benefit, however, I would like to discuss another option: living benefits of whole life insurance.
The following are some of the key living benefits of whole life insurance:
- Premium payments are guaranteed to remain level for the entire premium-paying period. You will not be faced with increasing premiums in future years.
- Whole life insurance provides a guaranteed cash value. The guaranteed cash value will increase every year.
- You can borrow against the policy by taking a loan against the cash value of the policy. You should be aware that the insurance company may charge interest on the loaned amount.
- The death benefit is reduced by the amount of outstanding loan at the time of death.
- The cash value of a whole life policy accumulates without being subject to income taxes. You may be taxed when you withdraw the cash value, if the cash value exceeds your payments into the policy. Please consult with a tax professional for advice concerning the income taxation of life insurance policies.
- Some insurance companies offering whole life insurance may offer dividends, in addition to the guaranteed cash value. Dividends are typically not guaranteed, however, they may provide additional values to the whole life policy. There are a number of dividend options that give added flexibility to the policyholder:
- Paid up additional insurance – The dividend provides an additional death benefit payable in addition to the policy death benefit.
- Applied towards premium payments – Dividends can be applied towards premium payments resulting in lower out of pocket premium payments.
- Cash – Dividends can be received in cash.
- Cash value of the policy is protected from creditors.
- Cash values can provide an income supplement at retirement.
- Policy riders such as Disability Waiver of Premium and Accelerated Death Benefit Rider provide additional benefits to whole life insurance:
- Disability Waiver of Premium will waive premiums due if total disability occurs maintaining the policy death benefits and living benefits.
- Accelerated Death Benefit Rider permits a payment of all or a portion of the death benefit if the insured is deemed terminally ill.
- There is policy payment flexibility as some whole life policies can become fully paid up in periods of time, such as; 10 years, 20 years, age 65, age 100 and age 120. Fully paid up means that the coverage would continue without premium payment requirements. You can choose which product meets your needs and premium payment comfort.
As you can see, there are many advantages with living benefits of whole life insurance.
About the author: Ken Buccico holds a LUTC designation and has been in the life insurance business for 39 years. His wealth of experience empowers clients to make best possible decision regarding a life insurance policy. To explore the best life insurance option, contact Ken at 1-800-651-1953 or KBuccico@Pivot.com.