Positives And Negatives Of Whole Life Insurance
Life insurance provides a safety net in case of disasters. These can
include accidents as well as death. Any discussion of whole life insurance is
incomplete without a discussion about the alternative, term life insurance. The
purpose of both the insurances is the same, that is to provide help in a crisis
situation but we will see very vast differences when we consider the two in
more detail.
Pros of whole life insurance
One of the definite advantages of whole life insurance is that it is
a permanent plan. And this means that there will be a definite pay out when the
plan ends (usually when a person dies). This means that there will be monthly
installments that you will be paying all throughout your life and these will
continue to accumulate along with the interest on them. The nature of whole
life insurance ensures that there is a large amount of money that can be
accumulated which would not be possible if one tried to do so in a lump sum.
For this reason it is a great tool which should be used to ensure that you
family and loved ones are okay even after you pass away.
During the course of your life there are bound to be accidents or
emergencies when you require immediate funds. In such a case you can always
withdraw funds from the money that you had been paying for your insurance. What
this means is that you don’t have to run to a bank for a loan and therefore
don’t have to pay insurance to the bank. In essence you can simply pay interest
to yourself and eventually make sure that the loan you take out is once again
returned to your own insurance funds.
Furthermore in the event of your death a large sum of money would be
available for your family members and other beneficiaries and this money would
usually not only get a death benefit but also it can be withdrawn free of tax!
Cons of whole life insurance
One of the down sides of whole life insurance is that it can be very
costly. In comparison term life insurance is relatively less expensive. This
means that sometimes even people who want whole life insurance can’t get it
because that means that it puts a lot of additional stress on their income.
Term life insurance guarantees the people a comparatively smaller fee and while
it is only rewarding if an accident happens within the insured time, it is
still very beneficial. For this reason term life insurance is much more popular
then whole life insurance.
The whole life insurance policies that you draw up with your agent
or agency can be extremely complicated and time consuming. A lot of the times
the agencies will purposely show you false returns or inaccurate returns to try
and get you to work with them as well.
Last words
There are various other plans and policies that are similar to whole
life insurance. Many people like to have a variety of different insurance plans
at once as well. So maybe it’s worthwhile investing in both the shorter term
insurance as well as whole life insurance. It all comes down to personal
preference and personal capability. If you and your family make enough monthly
income to be able to take a fraction of it out and pay for whole life insurance
then go for it! However if you and your family are unsure if you will be able
to keep up with payments in the future then whole life insurance might not be
such a good idea.
