Whole life insurance is one of the basic types of life insurance that come with a lot of benefits. Indeed, the package comes with a number of benefits that many people have not discovered. For some people the only advantages that whole life insurance has over term life insurance is that the policy lasts as long as the policyholder is alive. But there are more that can be gotten from the package. If you have decided to buy whole life insurance policy, you should consider buying this type of insurance owing to the advantages that can be drawn from it. Here are some of the advantages of this type of life insurance policy.
It is a good investment of money
Many people do not know that it is a good investment of money to secure a whole of life insurance as it is called in Commonwealth of Nations. In the insurance policy, the beneficiaries designated by the policyholder are paid at the death of the policyholder. But the policyholder can also benefit from it. The cash value generated from the premium goes to the policyholder. So, the policyholder is not just investing his money for the beneficiaries.
The cash value of the premium can be used in several ways. Here are some of the ways that the cash amount can be used:
- You can borrow against it if you are in need of money without paying any income tax.
- It is also possible for you to withdraw from the cash value but you have to pay income tax on the money you withdraw.
- You can pay the premium of your policy using the cash value after it has accumulated.
The above explains why some people are buying it as a means of securing their future after their retirement.
The cash value is secured
The protection of the money inside whole life insurance is guaranteed. Your creditors have no power over the money. If you are sued for anything, nothing will happen to the money. This is because the benefit of life insurance policy is not meant for the policyholder but for the designated individuals and so nobody has right to temper with the money.
Guarantee values and rates
One advantage that whole life insurance policy has over other types of life insurance policy is that it comes with guaranteed values and rates. The guaranteed rates are of three kinds.
- Insurance cost: the insurance cost of the whole life insurance does not increase despite the situation of things in the market. This cost is also called the mortality rate.
- Interest rate: the interest rate is also the same through the duration of the policy
- Expenses: The administration expenses also remain the same and it is guaranteed
Guarantee value are three types, namely,
- Guaranteed premium: the premium paid by the policy holder does not change throughout the duration of the policy.
- Guarantee death benefit: no matter how the company is performing or what is happening in the market, the guarantee death benefit will not change.
- Guarantee cash value: the cash value does not only build up but it is not taxed.
