You may choose to purchase whole life insurance rather than term insurance if you want to have a permanent life insurance contract that you can count on always being there. As is the case with any insurance product, there are some pros and cons involved that you should fully understand before reaching a decision on the type of life insurance to obtain.
Pros of Whole Life Insurance
- Tax benefits- Your whole life insurance policy will grow on a tax-free basis, and in most cases, it will provide a non-taxable benefit to the policy beneficiaries.
- Financial flexibility- Whole life insurance has a cash value component that you can borrow against at generally low interest. You also have the flexibility to use the dividend in multiple ways, including reducing or eliminating premium payments or increasing the cash value of the policy.
- Consistent premiums- Your premiums do not increase as you age, making whole life insurance a hedge against inflation.
Cons of Whole Life Insurance
- Slow to accrue cash value- While it does take time for a whole life insurance policy to accrue a cash value, this is better than never, which is the case with term insurance.
- Surrender charges- Any premature withdrawals will involve a surrender charge, so be sure to read the clause in the whole life insurance policy you choose so you know in advance how long you have to wait before you can withdraw funds without incurring a penalty.
- Cost is higher- Whole life insurance premiums are higher than term life premiums, at least while you are still young.
- Complicated- It is best to work with an insurance agent when selecting whole life insurance because there are so many details to understand in order to select the one that fits your needs.
At Elite Benefits Group, we know that whole life insurance is a great option for most people. We’ll take the time to learn about your situation so we can guide you through the process of selecting a policy that affords you with the most benefits possible. We’ll give unbiased advice so you can be confident that we will advise you for or against whole life insurance depending on your situation. We can also go over other options, such as universal and variable life insurance. Contact us today to learn more.