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Whole Life Insurance Making a Comeback

Posted in Life Insurance , Whole Life Insurance

March 10th, 2010
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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.

Whole Life Insurance: Maximum Payouts?

Posted in Life Insurance , Whole Life Insurance

September 24th, 2009
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Whole life insurance is a type of insurance policy with two components, a death benefit and an investment tool. Many extremely wealth people utilize whole life insurance policies for estate planning purposes as typically payouts are made on a tax-free basis to the heirs of the policy. Legally, there are no restrictions on maximum payout amounts for the whole life insurance.

Payouts Vary

It is entirely up to the life insurance provider to determine the maximum payout amount for a whole life insurance policy. The trend in the early portion of this decade was raising the limits to provide significant death benefits, however that has changed. Your heirs can now receive up to 30 years of your annual salary depending on how aggressive you are with premium contributions.

If you are in the process of estate planning and are considering a whole life insurance policy, consulting a seasoned professional specializing in whole life insurance would benefit you. When you speak to them about all the available options, they can help you set a maximum payout amount that would make the most sense for your family.

Whole Life Insurance: Why Choose It?

Posted in Life Insurance , Whole Life Insurance

September 23rd, 2009
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With a whole life insurance policy, you will be purchasing not only peace of mind knowing that a death benefit will be provided if something unexpected cuts your life short, but can provide yourself with an investment tool that can be used to your benefit in your old age.

Reasons to Consider Whole Life

• Since you are a bad saver, you want to choose a whole life insurance policy to plan for your financial future and to provide for your heirs
• Your career path has been quite lucrative and planning an estate for your heirs is a goal of yours
• Since your beneficiaries will be inheriting sizable fortunes from you, they will need the death benefit to pay estate taxes on other assets
• Even after your death, you will be responsible for the long-term support of others
• Since you are in top condition and plan on outliving a term life insurance policy, a whole life insurance policy will cover you when you do start to age down the line

Choosing a whole life life insurance policy may seem like an odd decision to make, especially when you feel like your life is just beginning. However, the best time to make difficult and somewhat depressing decisions is when you are at the top of the game.

Whole Life Insurance: Investment Payouts

Posted in Life Insurance , Whole Life Insurance

September 23rd, 2009
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Whole life insurance is a way for the policyholder to diversify their investment portfolio while they are living and provide their heirs with a cash allotment after they die. The whole life insurance payout amount varies based on the mortality tables that insurance companies use in order to calculate the cost of insurance and the death benefit. The whole life insurance payout will also differ based on the policy size a person commits too.

Benefits

With whole life insurance, there is a guaranteed payout amount for the heirs. This is because whole life insurance is a type of permanent life insurance, meaning that as long as the premiums are constantly met and paid, the policy cannot be canceled. The policyholder will always have their permanent life insurance in place, thus adding a level of peace knowing that their heirs will be provided for upon their demise.

Investment Component

Whole life insurance has a feature where premiums that are paid into the policy also go to funding a cash value investment. Depending on both the size of the death benefit and the amount of money invested into the cash value portion of the policy, whole life insurance policies can have extremely high payout amounts to the beneficiaries.

Whole life insurance options can have high payouts for several reasons, including that many times the payout can be made without the heir having to pay income tax on the amount. Although a whole life insurance policy can have a high payout, the amount is determined by the policy value, the amount invested over the life of the policy, as well as whether or not the policyholder had a large loan against the cash value of the policy. That debt will need to be paid before the money is distributed.

FAQ: Who Benefits from Whole Life Insurance?

Posted in Life Insurance , Whole Life Insurance

September 23rd, 2009
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Term life insurance is a type of life insurance policy that guarantees a death benefit will be paid to the heirs of the policyholder. The only function of term life insurance is to pay money upon the death of the owner of the policy and only the heirs will benefit from this financially. The coverage for term life insurance is limited to a brief period of time or a predefined “term.”

Whole Life Policies

Whole life insurance policies are like a term life insurance policy taken x 10. Not only is there a death benefit to be paid to the survivors of the policyholder, the policy builds cash value and the policyholder can benefit from their whole life insurance policy while they are still alive.

Cash Value

While a whole life insurance policy is being paid off, the policyholder is not only paying off the insurance features of the account but is also funding a type of “savings account.” If the policyholder lives long enough for the fund to be paid up or to accrue a significant amount of cash value, the policyholder can benefit from their whole life insurance as they can tap into their investment, and depending on the policy, make cash withdrawals or loans against the account value.

Additionally, the policyholder will benefit from a permanent life insurance policy as the money that has accrued and the additional profit that has generated is done on a tax-deferred basis. The holder of the permanent life insurance policy will benefit from the tax-deferment until the withdrawal their money.

Whole Life Insurance: Longest Term Limit

Posted in Life Insurance , Whole Life Insurance

September 21st, 2009
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A whole life insurance policy is unlike any other type of life insurance. With a whole life insurance policy, the policy can be used as a way to build a substantial nest egg as after a couple of years of premium payments, the money contributed actually goes to funding the death benefit. The money for that death benefit accumulates and after a period of time, policyholders can access that money by borrowing against the principal. Until that time, the money that is stored away is invested by the whole life insurance company and the profit is tax-deferred until withdrawal.

Policy Length

From the day you first purchase the whole life insurance policy to the day you die, as long as you pay the premiums you will have this lifetime benefit. The longest whole life limit for this type of policy is based on a personal preferences of the policyholder in conjunction with the “paidup date ” they choose. The “paid up date” is when all the premium payments for the whole life insurance policy have been submitted and it becomes completely funded. Once funded, the policyholder may borrow against the investment or if they die, their beneficiaries will receive the money.

Who Qualifies?

Whole term life insurance will be issued to anyone between the ages of 0-99, but of course the later in life you choose to invest in a policy, the more costly it will be. The longest whole life limit can stretch into multiple decades, just like mortgages. Both are extremely costly investments that may take decades to fully invest and fund, which is why thirty years may generally be common for the longest whole life policy.

Securing and understanding a whole life insurance policy is one of the most difficult investment strategies to fully understand. If you are interested in learning more, contact a life insurance specialist to help you out.

Whole Life Insurance: Shortest Term Limit

Posted in Life Insurance , Whole Life Insurance

September 21st, 2009
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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.

Advantages / Disadvantages of Whole Life Insurance

Posted in Life Insurance , Whole Life Insurance

September 14th, 2009
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Whole life insurance is a comprehensive insurance policy like no other. Not only does paying premiums into a whole life life insurance policy establish a death benefit for your next of kin or other beneficiaries you list, the policy can be used as an investment strategy as the premiums fund a cash value for the account. Using whole life life insurance for both the death benefit and investment builder aspects has many positives, but there can also be some drawbacks.

When contemplating whether or not to secure a whole life insurance policy, it is important to truly weigh the pros and cons before signing on the dotted line. You should also obtain multiple life insurance rates and compare them before. Go Insurance Rates can help – by filling out our online form, you’ll receive free rates quickly and conveniently.

FAQ: Can I Withdraw Cash from a Whole Life Insurance Policy?

Posted in Life Insurance , Whole Life Insurance

September 10th, 2009
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Whole life insurance is only one of the options available to consumers interested in getting a policy with a death benefit to provide for their family. Whole life insurance is not just a policy that kicks in after you are gone, it is a complicated financial tool many people utilize to plan for retirement, their child’s education or even buying a home.

How Do Withdrawals Work?

When a person opts into a whole life insurance policy, they are choosing a type of insurance that provides a death benefit builds a cash value that can be tapped into like a line of credit. The cash value of a whole life insurance policy accumulates over time with the first couple of years going towards expenses associated with opening a policy. After year two or three, premium payments start making more significant contributions to the overall principal account value and with enough funding, a person will start building value in their policy.You can typically make cash withdrawals from your whole life insurance policy much like a low interest loan.

Cash Value Benefit

Many people choose whole life insurance policies because they will have the ability to tap into the cash value just in case. By making a cash withdrawal from your whole life insurance policy, depending on the policy terms and the amount of value in the policy,the ultimate amount of the death payment may be reduced. When you opt to make a cash withdrawal from your policy you can opt to take either afull or partial amount of the cash value of the investment.

It is strongly advised that you seek the advice of a whole life life insurance professional to further clarify the matter.

How am I Billed for Whole Life Insurance?

Posted in Life Insurance , Whole Life Insurance

August 6th, 2009
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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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