How am I Billed for Whole Life Insurance?

Posted in Life Insurance , Whole Life Insurance

August 6th, 2009

Whole life insurance is a complicated investment strategy. This type of insurance not only provides a death benefit to survivors when the time arrives, but during the lifetime of the policyholder it can be used as an investment tool that can help fund retirement, education, mortgage protection and be utilized as an overall estate planning tool. Like any other insurance policy, those opting in are billed monthly for their whole life life insurance policy, however the premium payments do more than ensure that there will be a pay-out at death.

When policyholders for a whole life insurance policy are billed and then pay off their whole life insurance policy, for the first couple of years, that money is just like paying the dues of other types of life insurance. But after a couple of years, that premium payment is actually going to fund a long term investment strategy where the money can be accessed by the policyholder later on in life. Some benefits to a whole life insurance policy include:

• A death benefit without federal income tax for beneficiaries
• Cash value accumulation that are tax-deferred
• The flexibility to borrow money against the investment ,typically tax free
• Once a person commits to a whole life life insurance policy, premiums will remain the same
• As long as the premium payments are up to date, the policy cannot be canceled
• The money used to pay for a whole life insurance policy can earn money in the form of interest or dividends as decided by the managing investment company
• The plan can be altered by adding riders based on the needs and wants of the policy holder

After the initial strategy for a whole life insurance policy is determined between you and your insurance representative, you will be billed monthly and the premiums are expected to be paid on time in order to keep the whole life insurance policy active.

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