Both life term insurance policy and whole life insurance policy have their own features and advantages. While life term policy is the most common policy in the market because it is cheaper, there are those who still prefer whole life policy. Whole life policy also has its own advantages and some of them have been outlined in this article. To begin with, a whole life policy guarantees that the beneficiary you specified when taking the policy will be paid in the event of your death. The policy guarantees a death benefit that does not decrease and one that is usually tax-free. If you wish, you can be given the death benefit in the form of regular monthly income instead of a single lump sum. When you take the policy, you are assured that the people you leave behind, be it your wife, children or business partner will not struggle much with their bills. Your policy can be used to foot any bills that may be incurred along the way as they try to adjust their lives without having your income. Secondly, whole life insurance policies have a cash value. For this reason, the policy holder can borrow them in case he wishes to do something. Thus, they are a good way of getting refinance from the insurance company. In case you want to surrender your policy, you will receive its cash value, which is free of tax. The third advantage of having whole life insurance policies is that you can earn dividend if you hold a participating policy. You are automatically eligible to get dividends on the cash value of your policy when the company performs well. With the dividends, you can reduce your premiums or purchase up additions. If you wish, you can also receive the dividends in cash or leave them to accumulate interest. Contrary to what most people believe, whole life insurance are not way out of reach. In fact, the value of your policy will depend on a number of factors such as age, hobbies, occupation, driving record, physical health, and so on. Insurance companies will look at the above factors before they decide the premiums you should pay. Basically, they wish to determine whether you are a high risk or low risk customer. A high risk customer is one that has lower chances of living and the reverse is true. Your remaining days may be affected by your age, occupation, or health status. For instance, if you have a chronic illness, you are considered high risk because you have lesser days to live than a perfectly healthy individual. You will therefore pay more premium than a healthy individual. The younger generation are considered a low risk customer group as they are expected to live longer. The best thing about whole life insurance is that your premiums remain constant regardless of your condition or age. As you grow older, you will still pay the same premium you were paying when you were younger. This is unlike in other covers such as term life insurance polices.
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Both life term insurance policy and whole life insurance policy have their own features and advantages. While life term policy is the most common policy in the market because it is cheaper, there are those who still prefer whole life policy. Whole life policy also has its own advantages and some of them have been outlined in this article.
Edward Smith is author of this article on whole life insurance. Find more information about term life insurance here.
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