What is Whole Life Insurance?
The main feature of a whole life
insurance is it covers you for lifetime. As long as the premiums are
paid, you will be covered even after your retirement age. In most
cases, the sum assured of the death benefit will remain the same, so
does the amount of premium. You are going to pay the same amount of
premium down the road until the death benefit is fully claimed.
Whole life insurance policy is usually a
participating policy, which means you are going to be benefited from
insurance company's investment return in the form of cash value. A cash
value is normally comprises of contractual and non contractual return
from the insurance company.
Whole Life Insurance Benefits
One of the benefits of whole life
insurance is its participating nature. Here is where your interest,
dividends or bonuses are accumulated as part of cash value. After
paying the premiums for several years, when enough cash value is
accumulated, you can actually stop paying the future premiums and
still, you can enjoy the benefits of the policy you have bought.
Premium of whole life insurance is
constant. This is good when you come to doing your budget every month.
You know it is going to be a fixed outflow to you and you never have to
worry about this expense to go higher. The longer the policy goes, the
easier you will feel paying the premium, because it still remains as
initial, while your pay rises from time to time.
Besides, whole life insurance allows you
to borrow the cash value, in case you need it in an emergency. This
benefit very much suits those who need some cash urgently and at the
same time do not want to surrender the policy. While applying for
personal loan from bank needs time, and even a guarantor or collateral
sometimes, borrowing from your whole life insurance are always the
better option.
You do not have to worry about the tax as
well. The cash value of your whole life insurance policy is tax deferred
until you withdraw it. Hence, while the cash value still with the
insurance company, you are paying no tax for that.
|