Whole Life Insurance
When buying life insurance, the cost of the premium should not be the deciding factor. The cost should be factored into the decision but the benefits it will provide for your family is the important factor.
Whole life insurance keeps the same premium and face value from the day it is activated until the policy is cashed in. It is one of the worry free insurance types as it never expires, unless the premiums are not paid, until it is cashed in.
An advantage of whole life insurance is that it builds cash value as the premiums are invested and the policy holder is paid a profit when the investment earns a return and loses money when there is no profit. The cash value does not affect the face value of the whole life insurance policy. If you live and pay into your whole life insurance policy long enough, it is conceivable the cash value and the face value of the policy will be the same.
Whole life insurance is more expensive than term life insurance but purchasing a whole life insurance policy at a young age and fairly good health will eventually be worth far more than a term life policy that is bought for a maximum term of 20 years and then renewed when that term is up. The initial premium may be economical enough but to renew the policy 20 years later will be far more costly.
Whole life insurance is a valuable tool for retirement planning. At retirement age, a portion of the term life value can be turned into an annuity and use those funds as needed. It will be the cash value that is converted and not the face value so it is necessary to know how much the policy has accumulated before making that decision. If the policy was bought at a young age at a fairly inexpensive price, the cash value should be worth quite a bit of money f it was left to accumulate.
The cash value in the whole life insurance policy can be used as emergency funds and can be withdrawn at any time and used for any reason. You do not have to pay back the principal but you will need to pay back the interest each year. However, borrowing from your life insurance policy should be a last resort decision, especially if that cash is part of a future plan. Since plan pricing is based on the mortality table set by the government, the earlier the whole life insurance policy is bought the more affordable it will and the better the cash value will be if the policy and the policy holder has a nice long life.
Prices for policies will vary depending on the insurance company and the agent. Some companies have stricter guidelines the insured has to meet in order to get a good rate, while some companies will overlook most qualifiers and price accordingly. A knowledgeable insurance agent will be able to explain in detail the value of a whole life insurance policy.