What is whole life and permanent life insurance?
Whole life insurance is often considered a permanent life insurance product. This means that no matter how old you are when you die, and even if you become ill or are diagnosed with an illness at some point, your beneficiaries will receive a death benefit.
The two main types of life insurance are permanent life insurance and the temporary life insurance. The temporary life insurance Covers the insured person for a specified period, usually 10, 20, or 30 years. If the person dies during the policy period, the beneficiaries receive the full amount of the insurance. If the person survives the end of the policy, it expires, and a new policy can then be purchased if desired.
Whole life insurance has two parts. One is the life insurance component, which pays beneficiaries a death benefit. The other is the cash value (cash value), which can grow over time. Whole life insurance is more versatile because the policyholder can make tax free loans based on that cash value when there is sufficient balance. If you decide you no longer need the insurance, you can redeem the policy and receive the available amount in a lump sum.
Another factor that differentiates whole life insurance from term insurance is cost. Because whole life insurance offers lifetime coverage and accumulates cash value, monthly premiums are higher.
How much does whole life insurance cost?
At Halo, our whole life insurance policies are guaranteed issue, which means applicants do not have to go through the traditional medical evaluation process and are automatically approved. Of course, due to the lifetime duration and coverage guarantee, these policies tend to be more expensive. But regardless of how long you live, if premiums are paid monthly, your beneficiaries are guaranteed to receive the death benefit.
This also means that you will be paying this premium for the rest of your life, including in retirement. With the Halo policy — and in many other cases — the prizes are fixed throughout life.
Given so many variables, it is essential to carefully consider the cost of any type of life insurance and fully understand the policy before purchasing it.
What is the cash value of whole life insurance?
THE cash value It's like a kind of savings account within the whole life insurance policy. It grows slowly, with tax deferral, and accumulates as you pay policy premiums.
With your permission, the cash value can be used to pay premiums, keeping the policy active as your income changes with age. When there is a balance available, it is also possible to take loans based on this amount — whether for emergencies, medical bills or even a trip — through tax free loans. It is worth remembering that there are annual interest on the loan balance, so it's a good idea to repay it when possible. The death benefit will be reduced by any outstanding loans or past-due premiums.
For policies with higher death benefits, it is recommended that you consult with a financial planner or wealth specialist to see if this type of insurance aligns with your financial goals.
Who receives the death benefit?
As with any life insurance, the policyholder can name one or more persons or institutions as beneficiaries of the death benefit. This benefit, usually tax-free, can guarantee financial stability for a family, replace lost income, or even create a legacy with donations to charities or NGOs.
Some insurance companies offer policies with graduated death benefit, where the payment in the first few years is proportional to the total value or the amount paid in premiums. After a few years, the benefit increases until it reaches the full value.
How to customize a whole life insurance policy?
Life insurance policies may include additional benefits called riders or endorsements, which can increase the premium value, but offer extra coverage.
Some common riders include:
- Family Income Benefit Rider
Provides a monthly income in addition to the fixed amount of the death benefit. - Disability premium waiver
If the policyholder becomes disabled and is unable to work, he or she can temporarily stop paying premiums without losing coverage. - Extended Care Rider
It covers some of the costs of care such as home nursing or nursing homes, which are not covered by many health plans. - Accelerated Death Benefit Rider
Allows early access to part of the policy value if the insured is diagnosed with a terminal illness. - Travel Accident Endorsement
Increases the benefit amount if death occurs during a qualifying travel accident.
Why should I consider whole life insurance?
Whole life insurance can be ideal for protecting your family, inheritance or business, if lifetime premiums are within your budget.
Some reasons to consider this option:
- You want lifetime coverage
- Planning to use your retirement savings but still want to leave something for loved ones
- Want to manage inheritance taxes, preventing beneficiaries from having to sell assets
- Do you want to finance a trust fund for dependents with special needs
- Search equalize inheritances (for example, leaving a commercial property to just one of the children)
Why Halo Whole Life Insurance May Be Right for You
- You have between 60 and 85 years old and want a policy to cover final expenses
- Do you want to security of a policy with guaranteed issuance, without medical evaluation
- Want a policy with cash value component accessible in the future
- Are you looking for a policy with low coverage value
Whole life insurance offers a level of certainty that appeals to many customers. As long as the prizes are paid, the policy does not expire or lose value, and the death benefit is guaranteed. This provides safety and tranquility for you and your loved ones.
However, it is important to ensure that the value of the monthly premiums is within your budget. Many holders lose their policies after a few years because they are unable to maintain payments, which prevents them from enjoying the benefits of the policy.
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