What is Whole Life Insurance, and How to Find the Best Whole Life Quotes?
A complete understanding of a whole life insurance, as well as information on whole life insurance companies, cash value accumulation, policy loans, dividends, the rate of return and how you can find the best whole life insurance quote online.
Let’s understand first what whole life insurance is, then explore the role whole life insurance can play in your overall financial plan and portfolio. Whole life insurance is a traditional form of a permanent life insurance that guarantees a death benefit fo0r your spouse, children or charity of choice when you die, while providing you with a cash value that builds up inside the policy for you to use for any purpose while you are alive in a most tax advantageous manner. As you pay premiums to your whole life insurance policy, it accumulates a cash value or equity in your policy (or in an account). This growth inside your policy is fueled by the dividends paid by respective life insurance companies to your policy. Your premium will remain the same for life, and you will have choice of paying premiums for that duration, for 7 years, 10 years, 15 years, or until you retire.
The following are some frequently asked questions about whole life insurance policies. Please also feel free to call (877) 972-3262 to speak with one of our expertly trained specialists anytime, or complete this whole life insurance quotes request form now.
How do I access the cash value build-up (equity) inside the whole life insurance policy?
As long as there is at least some cash value in your whole life insurance policy, you can draw on it anytime. Part of each premium payment accumulates in this account and continues to grow tax-deferred as long as the policy exists. You can withdraw up to an amount equaling your original premium payments (also considered your cost basis) tax-free. You can also borrow growth or gain in your policy to avoid paying taxes on the gains. This makes whole life insurance an excellent savings vehicle for college savings plans, retirement planning, or any other personal savings goals, all while ensuring a death benefit for the continued security of your loved ones.
What are whole life policy dividends and how do they work?
Policy dividends are essentially returns on your premium. In order for a whole life insurance policy to pay dividends, it must be a “participating” policy. All big life insurance companies like Mass Mutual, MetLife, Guardian, New York Life and North Western Mutual have paid significant dividends every year. However, dividends are not guaranteed, and are paid solely at the discretion of the insurance company’s board of directors, depending on the company’s expenses, how its investments fared recently, and the amount of money paid out in death benefits that year. But, in reality these whole life insurance companies have paid dividends every year since their inception. The size of the dividend is determined by a formula that factors in the policy series, the size of your policy, your age, and the number of years the policy has been in force. Once a dividend is paid to your policy, it becomes guaranteed to you and you will only lose it if stock markets dive. Do not confuse life insurance policy dividends with the share/equity dividend you get in stock market. Your dividends are free from income tax, because they’re considered a return of premiums you have paid. They can be taken in cash, used to pay some or all of the policy premium, reinvested to gain (taxable) interest, or used to buy paid-up additions (like compounding interest) to the policy to pay regular policy premiums.
What are the other advantages of the cash value in a whole life insurance?
The cash value inside the policy is creditor-proof in most states. This makes whole life insurance a sort of double-indemnity policy by not only protecting your family should you die suddenly, but also, by protecting your family should you be sued or have to declare bankruptcy. Whole life insurance with a solid insurance company has an average internal rate of return of 5% over the long term. In addition, by law, an insurance policy is tax-deferred, so you won’t pay any taxes on that growth. And, under current tax law, you can take out a tax-free loan on a permanent policy. This adds an additional 2% to 2.5% onto your rate of return of the whole life policy. Lastly, the monetary savings of the term insurance premiums that you don’t have to pay — you are getting life insurance coverage, so you do not need to buy term insurance for the same amount — add another 2% to 2.5%. So your average total annual rate of return will be about 10% gross. Furthermore, you get this return while avoiding stock-market volatility, and if you pass away prematurely, you pass on all of the death benefits to your beneficiaries without income tax or estate tax (as long as your policy is structured in the right manner). There are very few savings and investment vehicles that will provide this kind solid a return with little volatility.
What if, down the road, I can’t keep up with the premiums for my whole life insurance policy?
If you ever feel that you are unable to continue premium payments—or that you have more coverage than you need and don’t want to surrender or take a loan against the policy—you have a few options. Depending on the size of your cash value account, you can use your cash value to purchase “reduced paid-up insurance,” whereby your coverage amount is lowered and no more premiums are required. Or you could turn the cash value into extended term insurance, which would keep your current death benefit (even if only for a limited time). You should buy the amount of whole life insurance that your current and future cash flow can sustain. Cancelling a whole life policy a few years in is not recommended. Please call (877) 972-3262 now for a consultation with a highly qualified specialist to decide on the appropriate amount of whole life insurance for you.
How can I find the best whole life quotes online?
Traditionally, most people have purchased whole life insurance through a local agent, who would sell these policies by presenting them door-to-door. More often than not, the agent was working for only one company, and would sometimes employ scare tactics and high-pressure salesmanship to guilt or intimidate a customer into buying a whole life insurance policy. Thanks to the Internet, consumers are now free to research whole life insurance quotes from different companies using unbiased sources of information. The Internet has long had term insurance quotes comparisons available instantly, but without any expert life insurance advice. However, whole life insurance is more complicated, because it is permanent and includes a personal savings element. Finding the best whole life insurance quote online requires comparing companies and policies and getting counsel from a knowledgeable professional. BeamaLife.com is an industry-recognized website offering such counsel along with the best whole life insurance quotes. Call (877) 972-3262 to speak with our whole life insurance specialists or complete this short form for a whole life quote comparison.
