Limited Payment Whole Life Insurance Pros And Cons - Tips To Uncover One

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Published: 20th December 2010
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Pros

When analyzing whole life insurance pros and cons one of many main pros is the cash value, this is without doubt one of the single greatest advantages of whole life insurance. Many financial advisers maintain that term-life is best for most people, as a result of the month-to-month premiums are lower and it offers the most important guaranteed loss of life benefit - however this line of thinking doesn't take into account the truth that most people don't die in younger years. (Only 1-2% of term life insurance policies ever pay out - most individuals outlast their term-life policies.) Whole Life Insurance has an investment component (money value) which grows tax-deferred. If the policy document is set up properly ahead of time, you might accumulate enough money value to cease paying insurance premiums by a specified age, or to take a loan from the money value (take a coverage loan) during your life-time on a tax-advantaged basis.

Policyholders who've term-life insurance pay their monthly premiums with after-tax dollars, and so long as they do not pass away, that money just vanishes . With whole life insurance, policyholders could grow cash value tax-deferred, and can take loans from their accumulated cash value tax-free. Whole life insurance also gives policy-holders the choice to use their accumulated cash value to pay their premiums with pre-tax dollars, which could be a significant benefit for policy-holders later in life who are at their peak life-time earning power (and paying the highest taxes of their lives). High net-worth individuals can use whole life insurance coverage to assist with their property planning - for example, by setting up an insurance trust that can pay estate taxes from proceeds of the whole life insurance policy. Whole life insurance is also useful in preparation for final expenses - funeral outlay, burial, etc.

Cons

When inspecting whole life insurance pros and cons one of the largest cons is the cost of premiums. People whose first priority is the highest loss of life benefit for the bottom monthly premium will probably be better served by a term-life insurance policy - because it's correct that by this measure, whole life insurance is significantly more expensive than term life. Some policy-holders may want a bigger assured loss of life benefit when they have young family, and then want to bump up the cash value of their policy later in life when planning for retirement. policy-holders need to make sure that their whole life insurance policy has the best degree of overall flexibility to offer them the choices they need - at every stage of their lives.

Another con to take into account with whole life insurance is you might not need protection for life. Most individuals need life insurance protection once they have any debts to pay, or families and loved ones to support. People in their older years may not need protection at a time in their life when children have grown up and don't rely on dad and mom for his or her financial support. Policy-holders who need more options for variable premium payment schedules, the flexibility to change the value of their death benefit or money value, or who want a larger array of investment options ought to consider other kinds of permanent life insurance comparable to universal life insurance or variable life insurance. It is advisable to look rigorously at every one of the pros & cons of whole life insurance so you can decide if it's the correct cover for you.

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