When you are not there, you want to ensure that those dependent on you are still well-catered for. Hence, the role of insurance cannot be over-emphasized. It helps to protect one's family in case of an unexpected outcome. That is why this article discusses one of the most recurrent insurance topics - the financial protection for human life using Whole Life Insurance.
What is Whole Life Insurance?
It is a permanent insurance package that pays your beneficiaries no matter when you die. Provided the insurance is in force, the insurance company pays the beneficiaries the death benefit upon the insured person's death.
What Makes Whole Life Insurance the Best Option for You?
Loved ones can get good death benefits with the whole life insurance policy. The payout with whole life insurance is often a lump sum compared to other policies. However, the benefit of whole life insurance surpasses cash reserve for loved ones only.
Premium (amount paid to the insurer) does not increase with this policy. Instead, this policy can help you build cash value with its saving feature. You can use this extra money to pay for your business needs, emergencies, retirement savings, or further education.
Another benefit is that you can get dividends from your insurance package. However, this benefit is dependent on the insurance company. If such a benefit is available, it will be stated in the policy contract, or you have to apply for it.
Factors Influencing Whole Life Insurance Premiums
The primary influence of your policy premium is the coverage amount you set. However, other factors affect your premium, and they are highlighted below.
- Insurer Requirement: Insurance companies require certain details they use to determine your life expectancy. If your expectancy is low, your premium is likely to be higher. Some of the details they require are credit, criminal history, age, gender, past health condition, weight, etc.
- Type of Whole Life Insurance: There are several types, and common examples are participating, non-participating, limited, modified, etc. Modified life insurance, for instance, offers low premiums at the start of the policy compared to later years.
- Application for Dividend: If you want your dividend to be included in your premium, it reduces how much you have to pay annually. However, companies offering dividends often collect a higher premium.
Whole life insurance is best for protecting one's spouse already in retirement. Likewise, it can help you leave a legacy for kids or charity. Howbeit, it has benefits for the policyholder. It has dividend return and savings features that are profitable.