Are you looking at getting life insurance and trying to weigh the benefits of a term life insurance policy over something that can offer you more of a long-term solution? In this article, we'll highlight some of the key long-term benefits of a whole life insurance policy so that you can decide if it's the right policy for you.
Some of the long-term benefits of whole life insurance include:
- Lifelong protection
Whole life provides coverage for your entire life as long as you continue to make the premium payments. Upon your death, the proceeds of your policy will be paid to the named beneficiaries that are listed on your contract.
- Cash-value for living benefits
Whole life insurance has the potential to accumulate a cash value over time. This is a value that can be borrowed against via a policy loan (or taken as a partial surrender) and used for future expenses such as a down payment on a home or help funding a college education.*
Other benefits of whole life insurance include:
- Level premiums
Although premiums for whole life are typically higher than term life insurance, the premium that you pay when the policy issues is the same level premium that you'll pay regardless of how old you are.
- Tax-deferred growth
Any accumulated cash value grows on a tax-deferred basis.
There are a number of different types of permanent life insurance policies that offer just as many (if not more) long-term benefits than whole life. Some examples include universal life, variable universal life, and survivor universal life — among others.
*The death benefit is collateral for a policy loan and if you die before it is repaid, the life insurance company will collect the balance that is due before determining what will go to your beneficiaries, essentially reducing the death benefit.