Whole Life Insurance – How Does It Work?
What is whole life insurance? What advantages it provides and how to purchase a plan? These and many others are questions we will answer in today’s blog post. Our website provides information about all types of life insurance and can help you find affordable whole life insurance quotes.
A whole life insurance is a policy that provides permanent life coverage and generates cash value at a fixed rate. The life coverage is paid as a death benefit to the policy’s beneficiaries after the insured passes away.
In other words, you will have permanent coverage and after you pass away, the people you name as beneficiaries will receive a specific amount of money. The policy features a savings account in which a part of the money you pay as premiums is redirected. The money in the account generates interest.
Why do you need it?
When you pass away, a whole life insurance policy will provide income for your remaining relatives. The income can be used to cover funeral expenses and other living costs. It also provides financial security in the eventuality that you pass away too soon. Dying without coverage is dangerous and can put your family through many financial hardships.
What are the advantages?
A whole life insurance is a complex policy and it provides many advantages like:
- Permanent coverage. By having permanent coverage, you make sure that your family is well protected.
- A policy’s account. The policy’s account can be sued to save money for rainy days. It comes at no extra expense and you can withdraw money from it, tax free, but only under certain conditions.
- You can borrow against the policy. If you need a loan at low interest rates, you can borrow money against your policy’s face value. If you do not manage to pay the debt, the amount will be deducted from the policy’s benefit.