Whole Life Insurance
What is Whole Life Insurance?
Whole Life Insurance is a type of permanent life insurance that provides lifelong coverage as long as premiums are paid. Unlike term life insurance, whole life insurance does not expire, ensuring a death benefit for your beneficiaries whenever you pass away. Additionally, it includes a cash value component that grows over time.
Key Features:
Lifelong Coverage: Whole life insurance offers protection for your entire life, providing a guaranteed death benefit to your beneficiaries regardless of when you pass away.
Fixed Premiums: Your premiums remain the same throughout the life of the policy, offering predictability and stability in your financial planning.
Cash Value Accumulation: A portion of your premium goes into a cash value account, which grows over time at a guaranteed rate. This cash value can be accessed through loans or withdrawals, offering financial flexibility for various needs such as emergencies, education, or retirement.
Dividends (in Participating Policies): Some whole life insurance policies may pay dividends, which can be used to reduce premiums, purchase additional coverage, or be taken as cash. Dividends are not guaranteed and depend on the performance of the insurance company.
Tax Advantages: The cash value growth is tax-deferred, meaning you won’t pay taxes on the growth as long as it remains within the policy. Additionally, the death benefit is generally paid out to beneficiaries tax-free.
Why Consider Whole Life Insurance?
Whole life insurance is ideal for those seeking lifelong coverage with added financial benefits. It’s a good option if you want to ensure that your loved ones receive a death benefit no matter when you pass away, while also building cash value that you can use during your lifetime. It can also be a valuable tool in estate planning, helping to cover estate taxes, leave a legacy, or provide for your family.
Flexibility and Financial Security
The cash value component of whole life insurance offers a unique combination of insurance protection and savings. You can borrow against the cash value or use it to supplement your retirement income, all while keeping your policy in force. However, borrowing or withdrawing from the cash value can reduce the death benefit, so it’s important to manage these options carefully.
What Happens if You Stop Paying Premiums?
If you stop paying premiums, your policy may lapse, which means you could lose both the coverage and the accumulated cash value. However, some policies offer a "reduced paid-up" option, where you can stop paying premiums but still maintain a reduced amount of coverage for the rest of your life, or a "surrender" option, where you can receive the cash value minus any fees and taxes.
Contact Us
Michael.Schermer@FreedomForceGroup.com
(410) 755-5882
Mt. Airy, MD