Whole Life Insurance For Dummies

 The Benefits of Whole Life Insurance

Top Reasons To Consider Whole Life Insurance ( 2019)-Whole Life Insurance for Dummies.

Whole Life Insurance for dummies

Having some issues understanding whole life insurance?  Good news for you.  Good Life Protection decided to write this shopping for whole life insurance for dummies break down for you to make things a bit easier to understand.

When you’re out shopping for life insurance policies, there is an extensive range of options available for you and your loved ones. It is great that there are a lot of options available to people in the life insurance industry, but that can also become problematic because too many options leads to confusion.

However, we always recommend that if you are trying to save time that you should stick to comparing rates and quotes with all life insurance companies.

You can do this easily below using our instant life insurance quotes rate engine to compare rates with 50 of the top rated life insurance companies.

One of the most common life insurance policies you would have come across is, ‘Whole Life Insurance’. It is a part of permanent life insurance, which means you will get coverage for life and all payments will remain. level (fixed amount)

It can be one of the best life insurance policies you can get because the protection never expires and you don’t have to worry about purchasing life insurance again if you pay the premiums on the whole life policy. The coverage lasts throughout your life, and you also get cash value build-up with your policy, which is essentially an asset.

Whole life insurance needs to be used in proper planning situations otherwise it could just be an overpriced expense causing a deduction to your bank account monthly. We are going to be covering the benefits that a whole life insurance policy offers you and why it can be a great tool in your financial portfolio.

Whole Life Insurance for Dummies-The Case for Whole Life Insurance

Benefits and Case for Whole Life Insurance for dummies

I wasn’t the strongest supporter of whole life insurance policy when I first entered the insurance industry. It can be an overpriced product if not used correctly – I was told of so many cases where people had bad experiences with this form of life insurance. In all honesty, I’m still not a huge supporter.  The fit must be very clear and easy to define for me to suggest whole life. It’s safe to say that unless you explain to me in detail what you are trying to accomplish, I most likely won’t be voting for you to purchase whole life insurance. If, however you do explain and I can see a clear reason and path to suggesting it, then that’s a completely different story.

When I first began in the life insurance industry I thought that term and Universal life was the obvious direction people should look when purchasing life insurance. I mean why wouldn’t we lean toward Universal Life?

They provide the protection and for a fraction of the cost.

Over the years I have familiarized myself with many situations where whole life insurance can be a great planning tool and provide leverage for consumers if structured properly.  Good Life Protection is by no means fully jumping on the whole life bandwagon, we do however believe a place in the life insurance industry is needed for whole life insurance coverage.

A lot of financial consultants and tax professionals tend to struggle when explaining whole life insurance, which is what leads to a negative perception about this form of life insurance.  Let’s cover some of the positives and negatives briefly.

  • Death benefits and Whole Life Insurance for Dummies

One of the biggest benefits offered by the whole life insurance policy is that you get a guaranteed death benefit that is typically tax free upon the death of the insured.  Your beneficiaries don’t have to stress over lapsing policies or rounding up funds to renew a term policy for you. There is a reason why generations of families have been using life insurance to protect their wealth, and the death benefit ensures that the financial future of your beneficiaries remains secure.

  • Use your policy for credit leverage and lending scenarios

Whole Life insurance is a good planning tool for individuals who seek capital for other means such as starting a business or borrowing money from a local bank.  Whole life can serve as great collateral from your lender to give you a better chance of being approved for a loan.

  • Limited Pay Options

In today’s life insurance industry, many companies are racing to compete with the trending line of insurance that can grab the consumers attention. Whole Life gets much more interesting when you look at limited pay whole life.  It allows you to condense premiums down into a shorter pay period.  In return, the cash value begins to “launch or pop” must faster inside the policy.  It also can work great for college funding for children or providing a savings vehicle for your child while the mortality and expense charges are very low.

  • Tax Advantages

Whole life insurance can also provide many tax advantages.  First, the growth is tax deferred and if structured properly, withdrawals can be tax free.  Whole Life Insurance can also provide a great tax sheltering for your estate with proper planning or using a planning such as an “ILIT”.  Life Insurance Trust

  • Complete access to cash value for life

The cash value you get with whole life insurance coverage can be accessed by you for any reason and at any time, which is a nice safety blanket to have just in case. There will be interest tacked on to the policy loan that you will eventually pay back or you won’t. It’s your money and can you do as you please with it.  Nothing is forcing you to repay the loan.

Returning the policy to its original form is advised that you if you want the policy to do and perform the way you originally imagined it would the day you purchased the policy. Repaying the loan also ensures that you don’t have to worry about depleting cash values and a chance of a lapsing or crashing policy.

  • High starting cash value amount (if you want) NOT ALWAYS

The more money you contribute to the policy, the higher your cash value will be at the beginning. The good news is that the cash value will continue to rise and typically even faster in later policy years.  This is just due to the time value of money and compound interest. The more principal in the policy from premiums paid, the faster it begins to stock pile in the policy.

High early cash values can typically result in a “MEC” or Modified Endowment Contract so you must be careful not to lose your great tax advantages.  Make sure to speak to a professional with Good Life Protection to make sure you aren’t exposed to this risk with the whole life policy you may be considering.

  • No taxes on dividends building inside the policy.  “PUA” Paid Up Additions

There is no guarantee for dividends, but most life insurance companies that have been around for over a century do pay out dividends on a yearly basis and do so on consistent basis.  Companies such as MassMutual have paid this just about as consistently as any company out there. Dividends can continue to accumulate tax deferred inside the policy known as “Paid Up Additions” or PUA.  This can begin to really stack the cash inside if your policy.

  • Guaranteed growth of your money every year

Whole Life Insurance can have a guarantee stamped on the growth and usually does.  Especially with the large whole life providers currently on the market.  You will get guaranteed growth inside your policy every year at certain interest rates. Be sure to work with a company that’s top in the industry in this department such as MassMutual or New York Life.

The cash growth is tax-deferred in most circumstance unless death occurs and it passes to a beneficiary. At this point you would be looking at tax free death benefit paid to the beneficiary. You can expect an annual growth rate of around 2.5% to 4% in this current low-interest rate environment. It that huge returns? No of course not.  It is however tax advantaged, safe and comes with a death benefit.  Show me a CD or “certificate of deposit” that can do all of that!  Pretty Unique product from my point of view.

  • No worries about Market Performance

Another positive note about whole life is that no market performance is factored into the growth capabilities of the policies.  Regardless of how many friends lose 15% on the year in there 401K, you will be okay on this investment.  A strong Mutual company or even a strong reputable stock company such as Lincoln Financial still reflects guaranteed cash growth, even in crashing markets.

Whole Life Insurance for Dummies Part 1.1

How does whole life insurance cost compare to other life insurance?

shopping for whole life insurance for dummies

It’s a common and known fact that whole life insurance is the most expensive form of insurance you can purchase. No denying this claim. When you compare them to other policies such as term or even universal the prices can look vastly different.  Let’s take a minute to consider why this may be…

  • If you pay your premiums, you are guaranteed a death benefit which means what for all my readers? The insurance company is on the hook for how long? FOREVER!
  • Cash Value component of the whole life insurance. Many people here the premium and want to run for the hills.  What they aren’t considering is that some of that money is stacking inside of the policy.  Once you deduct expense charges and mortality charges, the rest is going toward cash value.  Before you jump the gun to much and hang up on your agent, consider that factor when considering whole life insurance.

Whole Life Insurance For Dummies- What are your options for whole life insurance?

There are different kinds of whole life that you may run across when shopping the market including:

  1. Traditional Whole Life Insurance
  2. Singe Premium Whole Life Insurance
  3. Custom Pay whole life insurance

The traditional whole life insurance for dummies- policy offers you guaranteed minimum rates of return for your cash-value build-up.

Premiums typically paid till age 121.

The single premium whole life insurance for dummies- is perfect for someone that wants to buy a policy upfront and has a significant amount of cash to make that possible. This insurance policy offers cash value build-up, which is accelerated very heavy with these policies.  These can be great for business planning or properly structured buy sell agreements.

Custom Pay Whole Life’s-  Allow you to condense premium payments into shorter pay periods.  A great example would be the Mass Mutual Legacy Pay 10 and 20 pay policies.  These policies will allow you to condense the policy down to those pay lengths.  Either 10 or 20 years.  Once the premiums are complete, you no longer owe any money and have the guaranteed death benefit and compound interest working in your corner.

Pick A Reliable Insurance Company- Whole Life Insurance for Dummies Part 1.2

Picking a Reliable Whole Life Insurance and Benefits

If you want to acquire a suitable whole life insurance policy, it is imperative that you choose the right insurance company. That will mean choosing one that has a phenomenal track record of delivering outstanding success, and is financially stable. The good news is that we are one of the companies that can help.  We don’t represent the insurance carriers.  We represent you and will openly compare all options for you to make sure your whole life policy is structured to fit your needs and goals.

Not every insurance company offers the same rates and benefits with whole life insurance, so you should work an independent agency that can help you gain an understanding of your options. This will ensure that you get the best possible whole life insurance coverage and secure the financial future for your family and loved ones.

Extra Insider Tip-Be Aware of Cost Within the Policy- Whole Life Insurance For Dummies Part 1.3

Insider Tips and Benefits of Whole Life Insurance

You shouldn’t just buy the first whole life insurance policy you come across. It is advised to always compare policies and don’t buy policies that come with benefits that don’t line up with your financial goals. Often whole life is only advisable based on certain health ratings or even your age. A whole life policy can reach a point where it’s not quite as lucrative as other options.

You don’t want to be caught paying exorbitant fees with whole life insurance policies, since that defeats the benefits that it offers. Buying an insurance policy is making an investment for the future.  It doesn’t make much sense to allow that investment to perform any less favorably than you are originally seeking.

The bottom line on whole life insurance- Whole Life Insurance for Dummies

Bottom Line and Benefits of Whole Life Insurance

We understand this guide didn’t answer every possible question you may have about whole life insurance.

Our Whole Life Insurance for Dummies guide was here to at least get you started on your learning and purchasing options.

There are a lot of good things about whole life insurance.  Yes, it can be expensive, but some good things come at a price.  Good Life Protection isn’t gunning for whole life insurance, we are just simply making a point that it can be very good if purchased carefully after research and weighing your options.

There is no denying that the returns aren’t the highest and you could easily outperform a whole life with a different investment.  However, no one can claim it’s not a solid investment with a good return while remaining safe, liquid and with a tax advantaged death benefit.

Getting a whole life insurance policy at a young age will allow you to expose most of the strengths that come with these policies.  It shouldn’t be your only financial planning device but it can earn a spot on the shelf in a well-structured financial plan.

There is no point investing in a whole life insurance policy if you’re not making regular payments or don’t have the money to pay the premiums.

This will only result in the policy getting canceled and defeating the original purpose of the purchase and may even result in surrender charges.

To view whole life options, feel free to use the whole life quoting tool to look at different companies and pricing.  Always feel free to let Good Life Protection lend a hand in your search and may the best policy win!.