When you talk about life insurance packages that last for a lifetime, you talk about whole life insurance. Everyone indeed has a reason why they purchase their preferred policy but the idea of buying long-lasting coverage with many benefits sounds more looks like the best option out there.
Whole life insurance goes beyond protecting yourself. It is a means of building wealth and protecting what you will leave behind in years to come.
With this article, you will learn about what whole life insurance is and what you as a policyholder stand to benefit from buying it.
What is whole life insurance?
Whole life insurance offers a lifetime of coverage so long as you keep paying your premiums regularly. It is the exact opposite of term life insurance which lasts for a short period of not more than 30 years.
This type of insurance coverage is permanent and comes with a feature called cash value where you keep money aside, grow it, and borrow from it when you are in need. So, it is a means of savings kept aside for you when you buy the coverage. All these you can benefit while you are still alive and paying your premium
Aside from the cash value feature, this insurance coverage has a beneficiary benefit package where your loved ones will receive a lump sum of money in the event of your passing.
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How does a whole life insurance policy work?
Whole life insurance comes with an expensive premium because of the way it is designed. However, buying this policy means that you are sure of a lifetime of coverage no matter how long you live.
Once your coverage is in force, a part of your premium begins to go into your savings account called cash value. Your cash value attracts a fixed amount of interest rate.
Moreover, you are not permitted to touch the funds in the cash value until it grows to a certain amount. When the cash value has gathered enough funds in it, you can be able to withdraw against it.
The premium for your policy does not increase, it remains the same for as long as the coverage is in force. This is why it takes some years to build a tangible cash value because your fixed premium is what also funds your cash value account.
You can borrow from your cash value and pay it back as soon as you can but in a case where you pass away before paying it back, your insurance company will deduct the loan from your loved ones’ beneficiary benefits to replace the cash value and revert to the insurance company.
Meanwhile, the company still goes ahead to pays a lump sum of money to your loved ones. Sometimes, it can be channeled to using it to maintain your estate if you’re that wealthy.
Do you pay monthly for whole life insurance?
Premiums are compulsory payments you make for your insurance plan. For whole life insurance, you must pay premiums for the rest of your life since the coverage is for your lifetime.
Therefore, when you pay for your whole life insurance premium depends on your contract and your insurance provider. You can pay for your premium monthly or yearly as long as you live.
Conclusion
In summary, buying this insurance coverage brings financial security and wealth accumulation for you and your loved ones. It ensures your loved ones are financially secure and can offset any debt they incur while you are not with them again.
