There are two basic types of life insurance policies that you can buy: Whole Life Insurance and Term Life Insurance. Within each policy are numerous variations that you can select to help you customize a policy to fit your needs. In this article Whole Life Insurance is explained.
Whole Life Policies Explained
Whole Life Insurance, in short, combines a term of coverage and an investment which creates a cash value as the policy ages. Because of this investment component, Whole Life policies comparatively speaking to that of Term Life policies are more expensive. As a result of the added expense, many people cannot afford to buy an adequate Whole Life policy for the coverage they actually need.
Make sure that you take a close look at this life insurance policy option to see if you get the coverage you want versus the investment you want for your money. You may want to talk to your financial planner as well as your insurance agent to see what answers they come up with regarding your options. You may find it better to consider other ways to invest your money without paying higher premiums for a Whole Life policy.
When Applying For Insurance Tell The Truth
One very important thing to remember when buying insurance is to be truthful with all the required information. Lying to avoid a higher rate could put your claims and your policy in jeopardy in the future. Insurance companies are good at the phrase “trust but verify”. In the case of any claims which may seem suspicious, companies will investigate and if anything untruthful is found, the claim will be denied.
Health Exam May Be Required, Other Risks Considered
When making application for any type life insurance, most companies will require health information and you may need a physical examination. If you are a smoker, overweight, or have other health problems, you will probably have to pay a higher premium in order to get the coverage.
Also when applying for insurance, your occupation is taken into consideration as to whether you are a high risk. Even enjoying dangerous sports can cause higher premiums for coverage.
Borrow Against A Whole Life Policy
Whole life agents will tell you that whole life insurance is a good investment because you keep the policy all your life and it grows in value at you pay into it. As such, over time the cash value of the policy builds up from which you can borrow should an emergency arise. Often, you will need to repay the loan at some time. However, with some policies, there is a condition where you can withdraw money from the face value of the policy such that you wouldn’t need to repay the loan.
Age And Family Needs Help Determine Coverage Needs
Owning a whole life policy doesn’t always mean you can get the full, or appropriate, amount of insurance to meet your needs due to the expense of the policy. If you opt for a lower policy amount due to premium expenses you may find later on when you really need the policy that you do not have enough for the needs of your family.
In general whole life policies are insurance policies that you would pick up once your family is grown and out of the home. At this point your monthly expenses are less and you can afford the premium of a decent whole life policy. As a younger parent when budget is more of an issue a term life policy may fit your needs more appropriately.
If you are not concerned with a budget then the policy you may want to consider from the very beginning might be a whole life policy since it will continue to grow in value over the course of time that it is in effect. So, when buying a policy, consider how long you need to be insured and make sure you consult with an insurance agent and a financial planner.
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