This is Why to Buy Whole Life Insurance

If you are thinking about purchasing whole life insurance, there are definitely merits to this kind of coverage awaiting you.

Getting with an independent agent to help you in your planning is a good first start in your desire to purchase whole life insurance.

There are a number of scenarios where purchasing whole life insurance can work to your advantage.

Some examples are if you have a liquidity issue involving your estate, you have family health issues to deal with, you have a charitable intent, or you want added diversification.

Whole life policies provide death benefits along with a "savings account' so that in the event you live, you get back at least a portion of, and oftentimes much higher than, the amount you paid on your premium. You will get this money back either through cashing in the policy or by borrowing against it.

In most cases, whole life insurance necessitates that the owner pay premiums for the life of the policy.

It is important to note that there are some situations that allow the policy to be "paid up', meaning that no additional payments are ever needed, in as few as five years, or even through a single large premium.

Generally, if the individual fails to make a major premium payment at the outset of the life insurance contract, he/she is not allowed to start making them later in the contract life.

In some cases, whole life contracts provide a rider to the policy which permits a one time, or occasional large added premium payment to be made so as long as a minimal additional payment is paid on a regular schedule.

Typically you can surrender a whole life policy for its cash value. Over time, the policy grows in cash value, which is like building equity in a home. When the policy is surrendered, the owner is entitled to at least some of the cash value. The actual amount the owner obtains will depend on whether there are any outstanding loans or unpaid premiums that can be deducted from the cash value.

While much of this picture may look rosy, there are some potential disadvantages to buying whole life insurance.

Among them are it is a more complex product than the term life product, it has higher premiums than term life and it could be costly in the event coverage lapses early.

As with all insurance decisions, do your homework and consult with an independent agent who can help you along the way.