Before buying whole life insurance the pros and cons should be considered carefully. You should gather as much information on different types of insurance policies when making your decision. This way you make a well informed decision; the right decision for you and your family.
Here are some of the pros of buying whole life insurance policies. These policies have a cash value that is accumulated within a tax-deferred basis. This means that at the time the policy begins to accumulate the cash value it is essentially tax free. While adding up its cash value whole life insurance policies allow for the insured to borrow against the cash value of the policy. The coverage for this policy is extended throughout the policy holder's entire life.
Irregardless to how old you are when you pass away or how much time has passed from the time of taking out the policy the insurance company is required to pay the death benefit. As long as you continue to pay the premiums for the policy within the grace period provided your loved ones are entitled to this death benefit. A whole life insurance policy also accumulates dividends. The rate of pay out will increase as the policy matures. These policies have a included inflation protection added so that the death benefits will not decrease due to inflation over the years.
One of the cons of buying a whole life annuity is that in the event the policy must be renewed the premium rates will not remain the same. There is an increase to this premium based on the rates available at the time the policy is renewed. The return on these policies is as little as 6% of the overall cash value. You can only purchase these policies from mutual life styled insurance companies. If the company were to fail or file bankruptcy you will lose coverage as well as the money you invested. Premium payments are required for no less than 15 years, and even then you may not be able to borrow off the full cash value.
The policies cash value is also based on the individual insurance company's yearly performance. So you may want to take it under consideration to do your homework on the many different insurance companies in your area. A company cannot predict their failure, however, it is better to go with a company that has a proven track record than one that is new to the game.
There are whole life insurance pros and cons if you wish to know more about life insurance read this whole life insurance definition.
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