Wondering whether it’s a good idea to get whole life insurance? As you’re about to find out, it is.
For starters, whole life insurance benefits are permanent, unlike those of term life insurance. This applies to both the cost of premiums and the payout for your beneficiaries.
Plus, this payout amount is tax-free and is available to borrow as a loan if you need one. It also has cash value so you can use it for other purposes.
Want to learn more? The following guide explains everything you need to know. Read on to discover the awesome benefits of whole life insurance.
1. It Doesn’t Expire
Many life insurance policies have a set term, a length of time after which they expire. Whole life insurance has no such term.
It remains in effect as long as you are alive and continue to pay your premiums. This way, you know that your rates will never change and that your surviving family’s benefits won’t diminish.
2. The Cost of Premiums Won’t Get Higher
One of the best advantages of whole life insurance is how affordable it is. Granted, the premiums are usually higher than those of term life insurance, at first. But as you get older, your premium rate stays the same.
This is definitely not true of term life insurance. When the term expires, you must choose a new premium.
And the older you get, the higher your premium for term life insurance will be. On the other hand, choosing whole life insurance when you’re younger secures a lower premium rate for when you enter retirement age.
3. Know That Your Survivors Are Secure
If you decide on a set amount to leave your loved ones through your whole life insurance policy, this amount will not change. There are no factors that can affect this.
The amount is even free from taxation as long as you don’t put too much into it. You see, if your life insurance policy is overfunded, it’s recategorized as a Modified Endowment Contract (MEC). Then, different taxation rules are applied.
4. Use It For a Loan
You can also take out some of this tax-free amount ahead of time as a loan. Compared to other types of loans, this type is easy to get approved for and should come with a very low interest rate.
5. Spend It Whenever You Want
Additionally, this sum also has a cash value that you can use as you see fit. Besides the amount set aside for your loved ones, you can take some out right now and make a charitable donation. This can earn you an income tax credit—useful for years in which you earn an above-average income.
Or, you can take some out gradually to help fund your retirement years.
Remember These Whole Life Insurance Benefits
Don’t miss out on these essential whole life insurance benefits. If you haven’t taken out a whole life insurance policy, make sure you do it as soon as possible.
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