If you are one of many who have decided to get a permanent life insurance plan, then you may have also realized that it’s actually an umbrella term that covers a few different life insurance plans. So, deciding between whole life, variable, and universal life insurance can be a bit tricky. For those looking at whole life insurance, here are a few advantages and disadvantages of it:
Keep in mind that whole life insurance is a form of coverage that covers the person from the time that they get it to the day that they pass on. It’s also one that usually has a locked-in premium that stays the same as the years pass.
One pro to whole life insurance is that it has the most guarantees of permanent life insurance, making it the stable choice for those who want a concrete, dependable plan to rely on. It also has more of the nature of an insurance plan that doesn’t require people to check in on it regularly. You simply make your payments and are covered.
The other pro is that, unlike term insurance, this is a permanent life insurance plan that covers people throughout their entire lives and never expires unless the owner of the plan stops making payments, of course!
It also has a guaranteed death benefit and that benefit only grows as you get older, meaning that people will get more out of this policy the longer they have it.
Whole Life Insurance also can be used for dividends. This means that, if a person needs the money, they can cash out all or part it. This is better than term insurance in that the cancelling of term insurance usually results in no cashback.
This form of insurance also includes additional living benefits that people usually don’t get through other forms of insurance. What’s usually included is an accelerated death clause which allows the full payment if the owner is diagnosed with a terminal illness.
Whole Life Insurance also includes benefits if a person is diagnosed with a chronic illness or requires long-term care.
One Con is that, because it is a policy for life and not according to a term, the premiums are usually higher, but so are the payouts. The premiums will increase as people get older, however.
The other drawback is that people will find that owning a whole life insurance policy is not unlike having a mortgage in the first few years: Fees and premiums are high and the benefits are few early on. This does improve considerably after the first five years, though, as whole life insurance premiums are front-loaded.
There are also limits to contribution limits. Other plans allow for a person to contribute more than they need to create a bigger value to their policy, where is this one is set and can’t be increased beyond a maximum value.
Overall, there are positives and negatives to this program, but for those looking for a rock-solid, dependable plan that they can pay into and forget about, this is it!