Are you thinking about protecting your family with a whole life insurance policy? Are you unsure about all the benefits of whole life insurance? How do you even know if whole life insurance is the right type of insurance for your family? Read on for answers to all those questions as we examine Whole Life Insurance Pros and Cons. If you have questions along the way, please call us at 800-517-0810 and a specialist can get you pointed in the right direction.
Whole Life Insurance Features
Before we can look at whole life insurance pros and cons, let’s outline what makes whole life insurance unique compared to other insurance. The most important feature is that it lasts your whole life and its permanent. Also, there are types of whole life insurance that are guaranteed issue with no medical exam. Other features include that the premiums never increase and some build cash value. A final common truth for whole life insurance that is like other life insurance policies is payment to a beneficiary upon your death. Let’s examine the pros and cons of whole life insurance through these features.
Whole Life Insurance lasts your Entire Life
Pros – A whole life insurance policy lasts your WHOLE life. This is biggest standout when looking at whole life insurance pros and cons. Term life insurance is the other type of life insurance that many people compare to whole life insurance. Term life insurance expires after a certain number of years. Since whole life insurance never expires, that is a reassuring benefit for many consumers. Whole life insurance can’t be cancelled due to age or health. To get the most out of this WHOLE LIFE benefit, it is important for people to plan wisely with their whole life insurance plan. They should get the amount of coverage they need to pay final expenses without exceeding their budget. The whole life insurance plans will stay in effect as long as premiums are made. Making sure you can afford the plan you buy will ensure that the policy will stay intact and the death benefit will be paid to family members when it is needed to pay funeral expenses and other remaining debts upon the insured’s death.
Cons – Unfortunately, for an insurance company to cover you with a life insurance policy until you die, there is a cost. This is why whole life insurance is more expensive than term insurance. Term life insurance payments are fixed over a period of time while whole life insurance payments are fixed for life. That means for the policy to stay in effect for life, the monthly payment tends to be higher.
Guaranteed Issue Whole Life Insurance is Guaranteed
Pros – Guaranteed Issue whole life insurance = guaranteed acceptance. This mean EVERYONE who applies is APPROVED. With a whole life insurance guaranteed issue plan, you can’t be turned for health reasons. Another benefit to this type of whole life insurance is that there are NO MEDICAL EXAMS and NO HEALTH QUESTIONS on the application. Once again, your acceptance is guaranteed. The application process is quick and easy and takes less than 10 minutes. Guaranteed issue life insurance is great for those with severe health conditions.
Cons – With whole life insurance pros and cons, one thing that comes to mind under the cons is having a waiting period for the policy to begin. With a guaranteed issue plan, there is always a waiting period. For many clients, this isn’t a problem because the waiting period is only two years. But for people with serious medical conditions, there may be a chance that death occurs before the waiting period expires. When that happens, the monthly premiums paid are refunded in full plus interest. In most cases, that makes it worth the risk because it is better to try to have some type of life insurance in effect. Another con to guaranteed issue plans is since companies don’t ask any health questions on this type of policy, this makes guaranteed issue life insurance more expensive. Guaranteed issue plans are usually a last resort.
Whole Life Insurance Builds Cash Value
Pros – When you purchase a whole life insurance plan, a portion of your premium payments goes into a separate account called the policy’s cash value. Burial insurance companies invest this “cash value” money and over time the cash value of your life insurance policy grows. Once you have accumulated enough monies in this account, you can borrow against this money if needed. You can borrow from your cash value account (tax free) if you have cash value built up. Plus, you have all the time you need to repay the loan back. Individuals sometimes use this cash value for medical bills and college tuition for their kids.
Cons– It takes many years to build cash value up in a whole life insurance policy. Whole life insurance cash value will be next to nothing for several years. You need to understand that if you borrow from these funds and don’t pay the loan back, your death benefit would be reduced by the amount of your loan.
Whole Life Insurance Policy pays your Beneficiary when you Die
Pros – When you die, the insurance company pays your beneficiary the face amount of your whole life insurance policy. The amount your beneficiary receives will be tax free and they be free to pay your final expenses as they see fit. It’s also very important to make sure you have selected a beneficiary on your policy so your death benefits don’t get tied up in probate with your state. Plus, you can always change your beneficiary at any time by contacting the insurance company directly if needed.
Cons – Sometimes the beneficiary we choose doesn’t end up handling the responsibility well. Always make sure you assign the RIGHT person as your beneficiary. The person needs to be made aware of your wishes and someone you trust 100%. Remember, this person will handle your arrangements upon your death including memorial plans, burial or cremation, and handling remaining bills and debts. This can be a difficult task. Unfortunately, sometimes money can make individuals do stupid things. So, it’s important to choose your beneficiary who you KNOW will do the right thing.
Monthly Premiums Never Increase
Pros-When considering whole life insurance pros and cons, the fact that with a whole life insurance plan, the monthly premiums never increase seems like and obvious benefit. As long as monthly payments are made, the rate never increases. It is important to start your policy with an insurance company that will give you the most coverage at the lowest premium, especially when those premiums will be paid at a set rate until your death. A broker like Assurance Life can get you multiple quotes so you can be sure you are getting the plan that is best for your health profile and budget.
Cons– Sometimes people can’t afford their monthly payments and then all the previous payments are wasted due to the policy cancelling. When this happens, the policy has to be started over again and is usually more expensive because the client is older and often has additional health problems contributing to how the insurance company rates their application. That is why it is so important to ONLY taking the amount of whole life insurance that you can fit into your monthly budget. Life insurance is NOT something you should invest in and have to let it go a few months down the road. You would lose everything you put in and we don’t want that. We can’t stress this enough… ONLY take out the amount of life insurance that you can AFFORD. Also, you should know the ONLY reason your whole life insurance policy wouldn’t last your entire life, is because at some point you stopped making your payments.
Whole life insurance pros and cons- at the end of the day, the most important thing is choosing the right type of insurance for your stage of life. Assurance Life can help you determine if whole life insurance is a fit for your needs and what type of plan will protect your family when it matters most. When weighing whole life insurance pros and cons- the pros usually point people in the direction of a whole life insurance plan that fits their budget.