Whole Life Insurance
Whole life insurance policies are complex, and vastly misunderstood. A whole policy is a lifelong policy that gives you protection for as long as you live, no matter how long that might be.
When you die, the policy pays out a death benefit, just like a term policy. It pays out only when the insured dies, though some policies include an “accelerated benefit” you can use to pay medical expenses if you become terminally ill.
Yet whole policies also accumulate cash value. Some of your premiums get invested into an account that generates a minimum guaranteed return of 2.5%. This interest rate is not as high as some investment accounts might give you, but it’s generally considered a safe way to grow wealth.
Is a whole life policy a good investment?
These plans are best for high net worth individuals who have maxed out their other retirement plan options. Tucking this money into a whole life policy helps you keep it safe from taxes and creditors, and it allows you to diversify your portfolio.
It’s a low risk investment, but it also means it’s a low-return investment. You should use it as a single component of a strong, healthy portfolio rather than as your sole investment strategy.
What are the advantages of whole life insurance?
One advantage is that your beneficiary may get a lot more money. When you die, your beneficiary gets the cash value of the policy as well as the death benefit. The base death benefit can be smaller than with a term policy, so you’ll need to consider how long you expect to be paying into the policy when you purchase yours. Otherwise your loved ones might not get enough of a payout to make the policy worthwhile.
Which is better, term or whole life insurance?
Neither type of policy is better or worse. The insurance product that is going to be right for you will depend on your reasons for purchasing insurance in the first place, as well as your total financial picture. It also depends on the amount of money you have available to you for paying premiums.
Not sure whether whole life insurance is a good choice for you? Call and ask! One of the benefits of working with a private insurance agent is getting straight answers so you can choose the perfect policy for your life plan.
Do you have questions? Get started today by contacting TWFG Landeche Insurance at (504) 228-7184.