Protection for your loved ones.
Today, it costs a minimum of $250,000 to raise a child to age 18. That’s a big number, and just one piece of the costs of providing a comfortable life for a family. Life insurance exists to provide financial security for your loved ones in the event of a premature and untimely death.
Whole Life Insurance
Whole Life Policy also known as a Permanent policy is a little more expensive than a standard Term Life policy. It’s described in its simple form as Term Policy with a Cash Value feature.
The Term Side of the Whole Life contract is calculated generally to the 100 where if you were to purchase a straight Term Policy you choose the amount of time you want the term to be.
The Cash Value build up side of the Whole Life contract is calculated based on what the carrier needs to maintain the death benefit to age 100 as well as maintain the level premium you will be paying throughout the contract.
Pros to a whole life contract
You can borrow money from you cash value in your whole life contract for any reason i.e. education, business ventures or emergencies.
Note: You are not borrowing the money from your cash value account you are borrowing the money from the carrier (with interest). Your cash value is just used as collateral.
Cons to a whole life contract
While in the process of paying back the money that has been loaned to you and your untimely death occurs there will be a recalculation of the death benefit and your beneficiary will not receive the full death benefit.
Other information to note about whole life insurance
- Cash Value is accumulated on a tax-deferred basis.
- Whole Life insurance provides protection up to 100 years of age.
- Premiums and death benefit amounts stay the same as long as the premium payments are kept up.
- Death Benefit is tax free.
Term Life Insurance
Term Insurance is the least expensive way you protect your loved ones.
It allows you to structure protection at a fixed cost for a specified number of years chosen by you so that in the event of an untimely death while within this period the beneficiaries will receive the death benefit.
If you feel that you need to have coverage continue you might be able to convert to a permanent policy allowing longer protection.