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The Cash Value of Whole Life Insurance
April 9th, 2010 by admin
One of the biggest debated topics among life insurance coverage is the battle between whole life insurance and term life insurance. This debate comes about any time an individual begins considering the purchase of life insurance coverage for themselves or their family. Life insurance agents are use to dealing with potential clients asking them which is the best life insurance coverage to have whether it be whole life or term life.
However, depending on the life insurance agent will determine what type of answer that individual will receive. A good life insurance agent would discuss the differences between a whole life insurance policy and a term life insurance policy, but also include information about the cash value that one builds and how each may benefit the individual’s future. For young people, elderly and even life insurance for people over 80, the agent should explain everything clearly and in detail. They should start by telling the individual that a whole life insurance policy is permanent coverage for their whole life, while a term life insurance policy is only temporary coverage for a given period of time.
With whole life insurance there are three major benefits. The first is that the premiums are guaranteed to never ever increase as long as the individual has the policy. Secondly, as long as the individual lives the death benefit will never decrease in value. Finally, only a whole life insurance policy has the capability to build cash value after it has been in effect for three years. This cash value can either be withdrawn or loaned against later on. However, if the individual selects, then the cash value can just continue to build interest, which is also guaranteed.
Term life insurance is a bit different than whole life insurance in that it is only effective for a certain period of time in which the policy is in effect. These terms, which are also known as the annual renewable term, can come in either five, ten, fifteen, or up to thirty years. A term like insurance policy is perfect for an individual who needs a little bit of extra coverage for a given period of time, but they are not a permanent solution to life insurance. They only have the ability to provide an individual with a guaranteed death benefit and nothing more. A good life insurance agent should be able to explain all of this to an individual, but if they cannot, then the individual should seek another life insurance company perhaps.