- Used to cover permanent needs such as funeral expenses, additional inheritance and charitable giving.
- Can accumulate a cash value resulting in a reimbursement if the policy is cancelled.
- Offers a life time of protection.
What is Whole Life Insurance?
Whole life insurance is a type of permanent insurance in which the insured person gets coverage for the entire duration of their life as long as they pay the premiums.
We all want a better future for our loved ones, especially those who depend on us. But we never know what the future holds. There is no better way to show love to our dependents than leaving them stable and with little to worry about when that inevitable moment comes. Without your presence but with the provision you left them, they will hold you dear in their hearts.
Having life insurance is a bold step. There are several kinds of life insurance to choose from, and whole life insurance is one of them. It is one of the most standard policies that clients have been purchasing for a long time. The other types of insurance policies in this category include the term insurance, participating life insurance and universal life insurance. In this article, we are going to take a closer look at whole life insurance so that you understand it better and be able to decide if it is the right policy for you and your family.
Whole life insurance is a type of permanent insurance in which the insured person gets coverage for the entire duration of their life as long as they pay the premiums on time as per the agreed terms. It is an agreement between the insured and the insurer to pay the beneficiaries of the policy the death benefit when the insured passes away. Some people refer to this type of insurance as ordinary life or straight life insurance.
The Benefits of Whole Life Insurance
With a whole life cover, you get covered for your entire lifetime. This policy matures when the insured dies. This is contrary to the term life insurance, which has a defined period, typically between 10 to 30 years. If you live beyond the period in the contract of the term life insurance, then you don’t get the benefits. A whole life policy ensures that your loved ones will get the death benefit regardless of the time you buy, as long as the policy is still in force.
A whole life insurance policy has the cash-value component, which is an account in your policy whose value grows as you continue paying your premiums. The policy can build up the cash slowly at first, but this accelerates gradually and reaches a point where your earnings grow faster than the amount used to insure you, which is called the 'mortality cost' in this context. When it reaches this point, the earnings on your cash value can be used to pay for the subsequent premiums.
Moreover, when the cash value of your policy has increased substantially after a period of paying premiums, you can withdraw the funds, or you can even take a loan against the cash value.
A whole life policy helps you save money through the cash value and its benefits. The policy also serves as a source of cash for your family and dependents when you pass away.
Whole Life Insurance Riders
The whole life policy can be accompanied by riders, which are complementary benefits that can be added to the original policy. These add-ons offer you the opportunity to tailor your policy for special circumstances. Different insurers will list different kinds of riders. Here are some of the frequent riders.
Accidental Death Benefit:
If you subscribe to this rider, the dependents get an additional benefit to the insured amount if the policyholder dies in an accident. It's a great option to consider because accidental deaths can be overwhelming to the dependents left behind. You never planned enough when an accident strikes and most of the time, even the initial policy alone can still not be enough to fill the gap of your sudden departure.
When you have this rider in place, you get several benefits, especially when you get disabled. You can get disability payouts where you will receive money from the insurance company for a specified period. Depending on the exact kind of disability rider you sign up for, you can also get a waiver on the premiums you are supposed to pay. Despite the waivers, the policy remains in force, and the beneficiaries get paid the policy amount when the insured client dies.
Living Benefits Rider
Here, the insurance provider pays a portion of the death benefit to you if you are diagnosed with a terminal condition and you are given a specified life expectancy by the doctor. It's also called "accelerated death benefit".
Waiver of Premium
If you have this rider added to your policy, you get a waiver on your premiums in certain circumstances, for instance, if you lose your job or if you become disabled.
Accident Hospitalization Benefit
If you include this ride in your policy, the insurer pays for your medical bills in case you get involved in an accident, and you get hospitalized.
What Does A Whole Life Insurance Cover?
The death benefit of your cover can be put to use in different ways. The beneficiaries of the policy often have the freedom to choose how to use the money. However, the insured or the policyholder might have preferences on how the amount should be used, and this can be communicated to the beneficiaries or in a will.
The common uses of a life insurance benefit include:
Catering for funeral costs
The loss of a loved one is a big blow, and you don’t want the people left behind to be worrying about the costs of the funeral. They don’t have to deplete the little they have or take loans to give you a decent send-off. Whole life insurance takes this load off the shoulders of your loved ones by covering the final expenses.
In the course of our lives, we get into debt for different reasons, and because death often comes unnoticed, we might leave behind some unpaid amounts. With a life insurance policy, you can get these debts paid for you without having to put your loved ones through the agony of sourcing for cash.
Paying For Education
When the insured passes away, the policy amount of the whole life insurance can be used to finance the education of the beneficiaries. That ensures that the dependents continue to get quality education, and they pursue their dreams even if you are not around.
The payouts in this insurance policy can also be used to award money gifts to specified parties. This person can be anyone listed by the insured ranging from family members to organizations.
Who Can Consider Whole Life Insurance?
Now that you are familiar with the benefits of whole life insurance and what it entails, you can weigh whether this is the kind of policy that suits you.
A whole life insurance cover is an option to consider for people who have others relying on them for long-term support financially. These could be your children, close relatives, or people who you are supporting in one way or another.
You can also consider subscribing to this type of life insurance if you are looking to create an estate for your beneficiaries after you die. This policy is an excellent option if your beneficiaries need the benefits out of it to pay the taxes of an estate you are leaving behind.
If you are unsure about getting the actual benefit out of a term life insurance policy because you think you will outlive it, then whole life insurance is a good alternative for you.
If you want to have a forced means of saving your money, then this is the policy to consider because it saves you the outcome of the indiscipline that is associated with saving on your own.
Eligibility for insurance typically depends on the terms of the insurance provider. The minimum age for eligibility is usually the maturity age according to the laws of the country in question. The other criteria, such as the maximum eligible age and health checks, will be outlined by the company in question.
Emma Life Insurance offers affordable and flexible options for anyone looking to buy a life insurance policy. With Emma, you are practically unlimited. What’s more, you can easily buy from the comfort of your home.
In a nutshell, whole life insurance is an excellent policy to consider if you want it for family protection and to save for the future. It is also a safe option compared to the other types of life insurance because you have guaranteed cash value and death benefit. To get the benefits of this insurance, you need to stick to the contract and pay your premiums in time. As a rule, it is better always to pick a policy that is within your budget.
With Emma Life insurance, you can be sure to get a policy that lasts your entire lifetime and leaves your dependents with peace of mind. They also offer any help or advice to guide you through your decision-making process.