Whole life insurance is a type of death benefit that is guaranteed to remain in effect for the insured’s entire lifetime, as long as they continue to make timely premium payments. The premiums are fixed with whole life insurance and the price depends on the age and health of the insured at the time the policy is taken out.
Whole life insurance tends to be more expensive than other types of temporary life insurance because coverage never decreases or ends. Those with a whole life insurance policy are guaranteed to have something to leave behind for loved ones to help pay for final expenses, outstanding mortgage balances, etc. Because of this, whole life insurance is a popular choice for middle-aged and senior people.
Like other types of life insurance, whole life insurance is the cheapest for young, healthy individuals. Costs are the highest for older people who are nearer to the end of their expected lives as the insurance company would likely have to pay out without recovering the cost of the policy through premium payments.
Whole life insurance is purely a death benefit like term life insurance, so beneficiaries are not limited in how they can use the money. Ideally, the benefits would be used to offset immediate financial expenses, such as burial costs, consumer debt, mortgage balances and other obligations that could be potentially financially devastating to surviving family members.
Since whole life insurance has no expiration date, it can be considered an investment. Sometimes you can borrow against your policy since it is considered a cash asset. Whole life insurance policies are particularly attractive to those who are middle-aged or older, and those who are near the end of paying for their mortgages, auto loans or other large expenses. People with children often choose whole life insurance if they can afford it with the intention of naming the children as beneficiaries in order to pay off college loans.
Since whole life insurance lasts well-beyond retirement for most people, it’s important to consider how you will pay the premiums once you are no longer working. Signing up for a whole life insurance plan that you cannot afford past retirement will be a wasted investment. By signing up early in life, you can get a lower premium than you would as a middle-aged person or a senior.
You may be able to get your premiums reduced by submitting to a health exam. By proving to your insurer that you are in good health and not in immediate risk of death, you might be able to get a better rate than you otherwise would have. Consider a standard whole life insurance policy with a health exam requirement for the best rates.
Generally speaking, whole life insurance is the best choice for anyone looking for long-term protection, as long as the rates are reasonable and it is possible to pay the premiums beyond retirement. The younger a person is when the policy is taken out, the more reasonable the premiums will be, so don’t hesitate to look into this type of coverage.