Traditional Whole Life Coverage
Purchasing life insurance should be a necessity for almost everyone. The real question remaining then is, do I want to purchase a whole life or term insurance policy? Of course, this will vary for every individual based on specifics, but in general a whole life policy can be something of an investment.
When you take out a whole life policy, you are essentially protecting yourself and guaranteeing a payout until you turn 100 years old. The initial policy payment will seem more expensive compared to other types of insurance, but one must weigh the long-term benefits against the short-term expenses. Regardless of how long you live, or how late in life you die, the whole life policy will pay out the face amount to your chosen survivors.
Where whole-life has an edge over other types of insurance is in the benefits. If a young person is savvy enough to buy a whole life policy, the payments will be relatively low priced compared to a policy taken later in life. Also, as long as the policy holder continues to keep premiums current, the policy begins to build cash value, basically a part of the premium set aside as reserve cash. In hardship cases this money may be retrieved in exchange for cancelling the policy.
The other main advantage of whole life insurance is the premium is set and stays the same from day one until the last day. This means those who buy while young and healthy may end up paying less for a policy over time than someone who takes out a term policy at a later age, generally due to risk factors.
If a client needs a policy late in life to cover funeral and outstanding debt expenses, a version of the whole life policy is available called a Final Expense policy. This is a whole life policy with a smaller face value, which will keep expenses down and not expire at the end of a given period of time. It may be a likely alternative for a person late in life to keep his family from taking on additional debt upon his death.
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