Friday, 24 Sep 2021

Is It Worth Investing In Whole Life Insurance

Life insurance, as the term defines itself is insuring life. Now, the question is whose life is getting insured? Well, Life insurance is a contract between an insurance company and policy holder, which can be either you or your family member. An insurance policy is taken to give financial support to insurers’ beneficiaries, which can be spouse, partner, parents and kin.

So, how does the insurance works? It is an easy concept where you pay monthly or annual premium to insurance company and after your death, depending on your policy, company pays the sum assured to beneficiaries.

You must be aware that life insurance is broadly divided into two categories;

Term Insurance and whole life insurance quotes online instant

Term Insurance will cover you for a limited period of time. You are given a choice to the time period of 10 / 20 years, when you buy the policy, whereas, Whole Life Insurance remains in-force for insurers’ lifetime.

So, when we talk about Whole Life Insurance, there are many pros and cons.

Few important reasons to have purchase whole life policy are, it provide care of dependent or disabled child, helps in tax issues and liquidity of business. You also gets a build-up cash value at retirement. However, it also contains few confusing investment components. The money paid for whole life insurance gets accumulated as a tax saving investment and a policy holder can any or borrow money against it, which generally a consumer is not aware of.

Beware that whole Life Insurance come with premiums on higher side and you will be expected to pay these on monthly or yearly basis, depending on your selection at the time of purchase. Just remember, the investment cost completely depends on policy tenure. Moreover, insurance companies are not at all flexible regarding premium payment.

Consumers should always remember that there are many agencies who call them financial advisor and calls you to sell policies. So, be cautious when you get these calls or are approached by them.

Most of the insurance agencies sell these policies as a good investment tool but strategies also showcase that returns are pretty low in this policy when compared to other policies but most of the time you are expected to get 8% to 10% return.

You should also know how Whole Life insurance works. Well, whenever you pay premium, the amount is divided into insurance cost, administration and sales fee and policy’s value (cash). The cash value is used as an investment in your whole life insurance policy to give you guaranteed result and rate.

Also, if you buy WLI from mutual insurance company, then you might receive dividends when you cash value grows. You will be given a choice on how to use dividends. You can pay premium with it or can take cash.

So before you buy a policy, search for whole life insurance quotes online to get instant response on your needs and financial budget. Compare the price of different policies, minus term life insurance and check for estimates for the investment you will make and the approximate return amount.