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Whole life insurance is not something that most of us think of on a daily basis. It only comes up when someone dies or when you are shopping for life insurance. If you are in the market for life insurance, there are a few important decisions that you need to make. First of all, you need to determine how much coverage you want. Then you have to decide whether you want term or whole life insurance. Why would you want to get whole life insurance over term? Here are a few benefits to owning a whole life insurance policy.
Lifetime Benefits
One of the main reasons that you would want to own a whole life insurance policy is that it is with you until you die. It does not have a termination date and will be there for years. As long as you pay your premiums, you do not have to worry about running out of life insurance. Term life insurance will end after a certain period of time. Say you got a 20 year term policy. What happens after you turn 40 and your life insurance policy is up? Will you not need life insurance anymore? Now when you go to buy a policy at the age of 40, the price is a lot higher than it was when you were 20. With whole life insurance, you never have to worry about that.
Forced Investment
When you buy a whole life insurance policy, you will be forced into saving money. Your policy builds cash value, unlike a term policy. Many of us do not have the discipline needed to invest money every single month without exception. We get around to it whenever we can and that usually is not very often. With a whole life policy, they actually take a part of your premium and invest it. This means that you will be saving part of your money every month. It will grow over the years to a fairly large balance.
Policy Loans
At some point in life, you will probably be presented with a situation that requires you to borrow money. You might be hit with an unexpected expense or need money for any number of things. A great thing about whole life insurance is that you can actually borrow against the cash value. Many policies will let you borrow up to 90% of the balance.
This gives you a ready source of funds to borrow against if you need it. You can often get a loan from your policy at a much cheaper rate than from a traditional lender. In addition to that, you will not have to go through a lengthy approval process like you would at a bank. You simply go to your insurance provider, ask for a form, and then fill it out. You will nearly always be approved because you're basically borrowing money from yourself. The terms of the loan will be much easier to repay than with a traditional loan. You can pay back the loan at your convenience with interest. This is vastly superior to a regular loan.
