Whole Life Insurance Making a Comeback
In recent years, whole life insurance policies haven’t been among the most popular types of life insurance to purchase because of their high-cost. However, since the financial crisis, it seems they’ve been making a comeback.
According to a recent Wall Street Journal article, some people have found refuge in these long-term life insurance policies and the benefits they can offer.
The Cost of Whole Life Policies Have Long Been a Deterrent
The article looked at the recent popularity of the whole life insurance policy and why more people are turning to them rather than the always popular term policy. The term policy comes a lot cheaper than whole insurance because it will only pay out during a specific number of years (ex. 10 year period).
On the other hand, whole life insurance policies give more benefits, including coverage during the span of your life, as well as money set aside for tax-deferred investing so that down the line you will have extra money for retirement or other expenses while still alive.
However, because of these benefits, the whole policy comes at a greater cost and this has been a deterrent for those who simply don’t have it to give. But now it seems that many are looking past cost to the long-term benefits this type of policy can provide.
The Investment Power Is Greater With the Whole Life Policy
James Hunt, an actuary interviewed for the Wall Street Journal article, noted that it’s hard to make a “term life and bond fund work better than a good whole-life policy.” Because the investments of whole life insurance policies are tax-deferred until death, the dividends on investments are often much greater, which is not only good for you if you decide to pull some of your funds out early, but also for your beneficiaries when you pass on.
Of course, there are definite pros and cons of the whole life policy and they should all be considered before diving in. However, if you have the money to invest and are ready to commit for the span of your life (keeping in mind that your payments will significantly reduce over the span of the policy) then you could be giving your family a lot more than memories upon your death.