Whole life insurance is a simple way to financially safeguard your family. As with all life insurance products, your entire life provides a tax-free death benefit to your beneficiaries if you die. The greatest difference between other types is that the entire life policy lasts.
Whole life insurance policies that are considered "participating policies" can earn dividends based upon the financial performance of the company. Dividends can be used in many ways, including increasing the cash value of your policy.
Term insurance is a simple type of life insurance. It covers you for a specific time (e.g. 10, 20, or 30) and pays out if your term ends. Your beneficiaries are not entitled to any money if your coverage ends or you live beyond the tour. The death benefit and insurance premiums for most policies are guaranteed to remain the same throughout the term.
Premiums will be based on the age and health of you when you purchase your policy. They are generally lower for people younger than you. If you make all payments and do not cancel the procedure, the policy will be yours for the rest your life. Locking rates early is a great way to save money and help you in the future. The best payment option for you is up to you.
The whole life insurance dividend is another feature. Based on the performance of the company in the previous year, policyholders may receive an annual payment. Although dividends are not guaranteed but you can receive one if you wish. Future premium payments can be reduced.
If you are in the early stages of a career with high earning potential, you can buy your entire life at a lower price and lock in a lower rate.
When you are young and in the beginning of a career that has a lot of earning potential, it is cheaper to buy your entire life while you are still young.
The policy payout is the same as a term-life insurance policy. As long as your premiums are paid, the death benefit amount is transferred to your beneficiaries as a lump sum that is not subject to tax. The death benefit will be paid in cash by some whole-life policies that are more expensive.
You have the option to choose how much money, or the death benefit.