The Basic Elements That Define a Whole Life Insurance Policy

A whole life insurance policy includes three basic elements that define its purpose and offer you long-term advantages over other types of insurance. Before you go looking for a good whole life policy, you should learn a little about them. Once you get a glimpse of what makes up a whole life policy, you may have more questions. Talking to your agent will get you the answers you need and allow you to make an informed choice. Discussed here are three essential elements of a life insurance policy.

A Whole Life Policy Covers Your Whole Life

Unlike a term life insurance policy, which is set for a specific period, a whole life policy is meant to cover your entire life. There is no set ending date. This insurance plan is designed to enable you to pay into the policy for the rest of your life, be it three years or thirty-three years. The payouts on this type of policy are usually higher than those of a term policy. However, since the payout is higher, the premiums are generally higher as well. The benefits are designed to provide for your family when they no longer have access to your income.

Cash Value Is Earned Over Time

The way a whole life policy is set up makes it easy for it to earn cash value. Part of your premium automatically goes into an account that will provide you with the insurance you need. The rest of your premium will go into another account. This cash value portion of your premium will continue to grow over time. Once your policy has earned enough cash value or equity, you will be able to borrow against it. If you choose to use this feature, it will decrease the cash value of your policy and reduce the amount of your payout.

The Benefits of a Whole Life Policy

There are several benefits to purchasing a whole life policy. Even though your cash value will keep growing with each passing year, your premiums will continue to remain the same. As your cash value grows, you will be offered the option to borrow against your policy. Once you pass away, the beneficiary of your policy will receive the face value of your policy after any loans and fees are taken care of. This is normally why a whole life policy is best for individuals interested in financial planning that will benefit their family on a long-term basis. Additionally, your cash value is generally tax-deferred.

Whole life insurance does not have to be complicated or confusing. Doing a little research on whole life policies will give you enough information to get a fair idea of the type of policy that will suit your requirements and budget. Your next step should be to call a reputable agent who can guide you through the process of finding the right policy. Contact us at VGW Walker Insurance in Texas to get all of the answers you need. We look forward to helping you with all your coverage needs.