When we think about life insurance, the first thing that we consider is protecting our families from catastrophic events like untimely loss of life partner, etc. It is true for the term life policies, which are quite popular among families with children that require high coverage but anticipate decreasing needs over time.
On the other hand, the whole life insurance coverage is an option for the people who require life insurance but don’t mind paying a bit more in exchange for a guaranteed premium, a guaranteed death benefit, and also a cash value that tends to accumulate over time.
By contributing a certain amount every month, quarter or year, the death benefit becomes available to you. If something happens to you, your beneficiary will receive the full amount, even if you haven’t had the insurance policy very long. In this way, whole life is similar to term life, but the whole life offers a premium that never increases, and these premiums might be lower as compared to a term life policy, also when you pay into the policy, the cash value grows at a guaranteed rate.
Three steps to be taken
The first thing is that we must understand the many benefits of whole life insurance as compared to term life. The main benefit is that your courage remains in effect until the day you pass on. As long as you pay the premium on time and in full, you don’t have to worry about your policy expires.
In the case of term life insurance, this type of policy is only in effect for a predetermined period of time. The term life insurance is also called pure life insurance because, unlike the whole life insurance, there is no cash value component in this policy, and it is designed purely to give your beneficiaries a payout if you pass away during the term.
Now that you have a full understanding of what you get with a whole life insurance policy, it is time to take steps towards protecting the future of your family. Here are the three steps that you need to follow for the family’s future protection:
- Review the current life insurance coverage
Reviewing your policy is very important in securing the future of your family. Life insurance helps to secure the financial future of your family after your death, and it also helps to ensure that the estate that you have worked your life to build will be properly allocated to the beneficiaries that you have chosen.
When purchasing life insurance, you have to consider the financial responsibilities that your family will inherit immediately, like the mortgage or the car loan. In addition to that, you would want to consider long term goals like your spouse’s retirement or the education of your children. If you are to decide, you need more coverage, determine whether you need term life insurance or whole life insurance.
In the early years, the term life insurance generally has lower premiums but does not build up a cash value that you can access. The cash value policies come in the form of whole life insurance. It is very important to know what type of policy you own and how the benefits are paid if something anything happens to you or your spouse.
- Try requesting a minimum of five whole life insurance quotes online
The best way to save on life insurance is to compare all the possible options. In order to find the best rate for you, be sure to compare the insurance quotes from various companies. The prices might vary widely, as it depends on the type of insurance coverage that you choose and the personal factors like your age, gender, and the current level of health.
By using the internet for your advantage, it will not be long before you are presented with multiple quotes from different companies. Once you are able to gather this information that includes a death benefit and the monthly premium, you will have a very good idea of what to do next.
- Buy a policy that protects your family when you are gone
Remember that you can only afford what is affordable to you, but it is very important to spend your money wisely. The money that you leave behind via life insurance policy can be used for various types of expenses that include the funeral costs and the final medical bills.
If any amount is left over, it can be used in any kind of matter that the beneficiary chooses. This is yet another reason to compare various whole life insurance quotes online. You definitely need to know how much coverage you will be able to get for your money. In general, you should purchase as much as you can afford because this will give both you and your family peace of mind.
Try to be thorough in your approach
You should never buy whole life insurance on a whim. Instead, you are required to consider all your available options while comparing every last detail. Therefore, you have to make sure that you also consider how this will fit into your estate plan.
There are many people who find that they don’t need as much life insurance because they have other different investments. Of course, there are the ones on the other side of the equation, but these are the ones who need to purchase more life insurance as they don’t have many assets to leave behind.
If your approach is thorough, and you understand the importance of protecting the future of your family, then nothing will stop you from making the right decision. Even if you don’t do anything else, you must take the time to request whole life insurance quotes online. This will be putting you on the right track.
How to choose a life insurance policy?
Once you have taken the first steps in evaluating the unique situation of your life, then it is time to get down to the nitty-gritty of choosing and buying a life insurance policy, whether it be the term life or the whole life insurance policy. Below is the step to step process on how you do it.
- Think about the type of policy that you need
The first question is to ask yourself what you want the life insurance policy to do. You should think of it as a spectrum, as you can either get a policy that would simply cover the cost of your funeral or the one that will leave long-term wealth for your loved ones or beneficiaries.
Your choice will definitely be dependent on the amount that you are able to spend on the premiums, as well as the level of comfort, like life insurance that involves investment is riskier. There are some people who prefer to have a more straightforward guarantee.
- Decide how much coverage you will need
You will find many experts who will recommend around 10 to 15 times your annual salary, but this can vary. Even if you don’t have that high income, you might still require an ample amount of life insurance. For instance, if you happen to be a stay-at-home parent, then you may want to leave enough for the fulltime childcare, which obviously can be expensive.
- Choose a trustworthy agency or agent
It is a fact that life insurance is a contract, and your payout is only as good as your insurance carrier. You must research the companies that you are considering and choose the one that has a strong financial rating, a good reputation, and excellent customer service.
You must also make sure that you feel comfortable while asking questions. Vet prospective agents by finding out whether they belong to any professional organization and by talking with their references. Any type of recommendation from friends and family is also a good place to start.
- Consider how your needs may change over time
You must consider a flexible insurance policy. There are many young couples that begin with the term life insurance, but at the end might eventually convert to the whole life insurance as the term life insurance is like renting an apartment versus buying a home with whole life.
With term life, you build no equity, but your beneficiaries get a death benefit if you die during your term, as long as you pay the premium. Therefore, it can be a good choice for a young family with a limited income. Later down the line, however, you might want permanent or whole life coverage, and you may also have the income to pay the higher premiums.
Plan for a rainy day while you enjoy a sunny one
There are a few whole life insurance policies that may also allow you to borrow money against the cash value of your insurance policy in a few cases. Normally this can be done without the waiting periods and the credit checks normally required by the other types of loans.
You have to keep in mind that if you borrow against the cash value of the whole life insurance policy, you must consider the repay it as soon as possible. If you don’t, then your loved ones or family members will have a reduced death benefit if you pass away, as the unpaid loan balances are deducted.
What affects your premiums?
How much you will pay basically depends on the sum insured, your age, your health and whether you drink or smoke, etc. The higher the risk, the higher will be the premium. You can take out a whole life insurance plan for one or two people, though it will pay out only once, on the death of the first person.
You must consider taking out a waiver of premium with your policy, as this will be covering your monthly premiums if you fall ill and are not able to make the payments. Some plans also include sickness and disability benefits, while with some, you keep paying until you die. This can be expensive if you live a very long age. But with other types, the payments stop once you are to reach a set age, even though the insurance coverage still continues until you die.
What if you already have one policy type, but want another one?
As there are various options and features that the whole life insurance policy provides as compared to the term life insurance, but it is a fact that the term life insurance policy can be a cost-effective way to produce a given level of the death benefit. No matter what kind of insurance policy you have, you might be able to get the benefits of the other type.
- You can convert a term policy into a whole life insurance policy
Most insurance companies allow for this, and it can be an excellent way to continue your life insurance policy and build the cash value from which you can be able to borrow. The reasons you might convert your term to whole life insurance are:
- Build savings
Part of the price for the whole life insurance goes towards the cash value account that builds slowly tax-deferred. You can borrow against or withdraw the amount from the cash value life insurance. You can even have the option to give up the life insurance altogether for cash, as term life has no cash value.
- Now it is affordable for you
You might have wanted some type of permanent insurance but bulked at a price for the universal or whole life insurance. Now that you are able to make more money, so you would like to buy some long life insurance coverage.
- Lifelong dependent’
Perhaps your needs and requirements have changed, and now you have a lifelong financial dependent e.g., a child with special needs. In this case, permanent life insurance can help fund a trust for that person after you die.
- Estate planning
With the passage of time, you made it big and have more money and property than you have expected. Now you must be worried about the estate taxes that your heirs will owe after you die. Therefore, the whole life insurance can help, and your heirs can use the life insurance money to pay the taxes. Ask us how much a funeral costs. We have Mutual of Omaha burial insurance. Compare us with Colonial Penn or Globe Life Insurance.
Hi, I’m Mitch Winstead with Advanced Mutual Group. I have been selling burial insurance for over 20 years. Our website is http://www.advancedmutual group.com
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