Conventional Wisdom Regarding Whole Life Insurance

Whole life insurance has been around for a long time and it shows no signs of slowing down. It is still one of the most popular life insurance policies out there. If you are in the market for life insurance, whole life insurance should be one of the policies that you look at. There are many different aspects of a whole life policy that make it attractive to a buyer. What do you need to know about whole life insurance?

Lifetime Policies

One of the best benefits about whole life insurance is that your policy will last for the duration of your life. Conventional wisdom tells us that this is a good idea in today's day and age. People are living longer with advances in medicine. The average age is continually increasing and you have no idea how long you could live. If you buy a term life insurance policy that only lasts for 20 or 30 years, what do you do after that? What if your health is not good enough to qualify for another policy? You could leave your family in a terrible situation. The last thing you want to do is out live a life insurance policy and burden your family with a lot of debt.

Investment

Another portion of a whole life insurance policy deals with investments. Part of your premium goes into an investment account in your name. You do not choose any of the investments or oversee them. However, the interest that is made accumulates tax free in your account. Life insurance companies have successful investors that handle all of their funds for them. Therefore you can be assured that your investment will grow. The conventional wisdom on this portion of the policy says that this is a smart way to invest. If you are not good at disciplining yourself to invest every month, this is a way to do it automatically. They will invest on your behalf and the cash value of your policy will grow.

Policy Loans

Another great feature of whole life insurance is the ability to borrow against it. Through the use of a life insurance policy loan, you can borrow as much as 90% of your cash value. This means that you can have tax-free access to money when you need it. This is a savvy way to form a tax shelter if you suddenly come into a large sum of money. You can buy a single premium life insurance policy in this case and then allow the interest to grow. When you need the money, pull it out in the form of a loan and completely avoid taxes.

The great thing about these loans is that they are low interest and they do not have a set repayment term. Therefore you can utilize it as a tax shelter and then repay it at your discretion. The interest will accumulate slowly and you can just make a minimal payment for as long as you want.

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