Whole Life Insurance: What are the Advantages?
Much has been made in the insurance world about the advantages of whole life insurance. For those in need of whole life insurance advice, it is important to consider all of the factors that might impact the product's performance. Whole life policies are not for everyone, but they do offer certain benefits over other types of life insurance for many individuals. Some of the advantages of whole life insurance have to do with its cash value, the held liquidity, and the fact that policy owners can legitimately save for the future. When compared to items like term life insurance, whole coverage is a more comprehensive type of investment product.
Advantages of Whole Life Insurance
When considering whole coverage, the first thing prospective insurance shoppers will want to know is what it can do for them. Is this a product that will protect their family for the future? What sort of extras does it offer for people who want a full investment vehicle? Whole coverage is advantageous because it allows individuals to get the life insurance coverage that they need, while also building stable funds for retirement. Additionally, whole life insurance coverage offers a cash value element that individuals can borrow against at points during the life of the coverage. This can be helpful for funding the big things like college, a new business, or even a second home. In short, whole life insurance is best-suited for individuals who like to manage their wealth in one location, rather than managing a portfolio of mixed investments and end-of-life insurance products.
Reported negative aspects
Some have criticized whole life coverage, suggesting other types of life insurance instead. One notable critic of whole coverage is Suze Orman, who actively campaigns against the whole life product. Whole life insurance, at least according to her, is a waste of resources and represents a sunk investment cost. Her reasoning is that if individuals are responsible in their investment practices, then they should not need a life insurance policy to cover them at death. She suggests that people should save and invest on their own, taking care of things like mortgages and debts instead of paying for premiums. Though Orman does a nice job of breaking down some of the pros and cons of whole life insurance, she fails to see that whole coverage can be a good option for many. It gives them an opportunity to build up a cash account that can possibly pay them dividends and returns throughout the life of the policy. They can access their cash tax-free up to a certain amount, providing much more liquidity. It is also virtually a guaranteed return, so individuals don't have to worry about researching various financial products and they aren't nearly as chained to the whims of the investment market. It is true that some people could be making greater returns with their investment dollars, but whole life insurance is a stabilizer for people who want to limit risk. It should go without saying that when looking for financial advice, whole life insurance tips, or anything in-between, consulting a financial professional is a must. Orman criticizes whole life as an investment product, but a great whole life insurance tip is to consult an expert to see if the coverage is right for you. That expert will likely lead you to an insurance provider that sells whole coverage with cash awards, pronounced liquidity, and multiple tax benefits. Ironically, most people in the insurance business (or those who are involved with any financial offering) will tell you that it's best to research your situation and make a decision based on the facts. Suze Orman does this, but then categorically states that whole life insurance is a waste. One out of every four people who get a life insurance policy in one form or another choose the whole life product, which seems to suggest that people take comfort in the variety of options this particular blend of life insurance / investment can offer.
Evaluating Whole Life Insurance for You
When looking for whole life insurance advice, prospective insurance shoppers will want to know the organized version of pluses and minuses. The following are pros and cons of whole life insurance: The Pros
- An easy way to save for retirement over the course of a lifetime
- Provides more than ample life insurance coverage
- Reasonable premiums for those who start the policies early
- A highly useful cash value account
- More stable than other investment types and life insurance products
Cons
- Premiums are more costly than term life insurance
- Less control over the investments made
- Policy holders pay premiums for life in most circumstances
When looking for whole life insurance advice, you must consider your own situation and all of the alternatives. For some people, it is a much better life insurance choice than term life or the other hybrid investment options. There are many advantages of whole life insurance, but you can't be completely sure without consulting a skilled financial professional. Are you ready to review your options? Use the form at the top of this page to research current rates and review offerings from both local and national providers.
