Whole life insurance gives you just that ― insurance protection for your whole life, with a premium that remains level. Whole life insurance also lets you protect your family and build guaranteed cash value.
Whole Life policies don’t expire and have a level payment that stays the same for the duration of the policy, regardless of how long you live. One of the biggest benefits is that every year the death benefit increases. That means, the longer you live, the more valuable your policy becomes to your beneficiaries.
Whole life insurance policies also have a cash value. The cash value can be a cancelations cash value; alternatively the cash value can be borrowed against while you’re still alive. The short term cash value is terrible in the first few years — you may only get a few dollars back — but the cash value is very valuable over the long term. You will eventually get far more back in cash value or death benefit than you paid in premiums.
Whole life insurance also offers different pay plans. You can either pay the same rate your whole life or choose a 15- or 20-year pay-plan. This means that you compress your payments into 15 or 20 years (instead of over your whole life), and although you’ll still have insurance until you die (and keep earning a higher and higher cash value/death benefit) you stop paying after the allotted amount of time. This is a good idea if you don’t want to have a payment to make once you’re retired, but it does make the payments higher in the short term.
You can add Term insurance to a Whole life insurance policy too, either as a 10-year or 20-year term. This way you have affordable long term coverage, and you can add a term policy to have a substantially higher amount of coverage for a short time. After the term is over, you’ll drop down in price to just the Whole life premium. This is a good option if you want increased coverage while you are carrying a high debt load, but need less insurance coverage once you pay off the debt.
Whole Life insurance is best for those who want coverage for their whole life and not just to cover a debt (which is what Term life insurance is best for). Whole life policies are a great option for covering final expenses, estate and tax planning or inheritance for family or a charity.
A Whole life policy is best for those who want more potential for growth than is offered in a Universal policy. It is best for those that have the financial means to pay for a policy without needing the option to skip payments, which is only offered with a Universal policy.
Whole life insurance is especially valuable if you are young, as you have the maximum amount of time to earn cash value and increase your death benefit. But, AMA has life insurance policies that can be tailored to anyone of any age.
Keep in mind that life insurance is a bit complicated when you’re trying to talk in generalizations, and it makes a lot more sense when you can relate it to your personal situation. Our life advisors are here to help you understand it and find the coverage options that are perfectly suited to you, so the best way to choose your life insurance is with an advisor by your side. Schedule an appointment today, and let our experts make the process easy on you.