Whole Life Insurance: Shortest Term Limit
You know that “whole” can be a very powerful marketing word, and for good reason. Whole wheat has many additional health benefits, whole grain is better than normal grain and a whole life insurance policy will cover you for your entire life. Whole life insurance will last you from day one of coverage until death. It’s a way for people to build long term savings while qualifying for a death benefit, and unlike other types of life insurance, a cash value is built in that is tax-deferred until withdrawal.
Term Limit Minimums
Whole life insurance is considered a “big-ticket” item purchase because the investment amount is so large it will take years before the cash value benefits and any death benefits are actually earned. Typically, the shortest term limit for a whole life policy is a seven-year payment plan. Although there may be some flexibility in place for the first couple of years of committing to a whole life policy, the greatest long term benefits will be achieved by faithfully funding the policy.
Why 7 Years?
The goal of a whole life policy is to pay off a certain amount of benefits upon death. Whether the death occurs prematurely or after a full life, the cost of the insurance company’s payments must be accrued over the policy period. The first few years of payment typically go to funding the overall policy, while into year three the death benefit amount starts to accrue, thus making the shortest limit for the policy about seven years. Over the course of that time, cash value will be contributed by the policy holder by regular funding.
Whole life insurance is a very complicated matter. If you are interested in finding out more information, contacting a specialist in this field is highly advisable.