Whole Life Insurance

With life’s uncertainties, it’s wise to make plans and secure financial stability for your loved ones. One significant aspect of financial planning is life insurance. While there are various types of life insurance policies, whole life insurance can be noted for its comprehensive coverage and long-term benefits.

What Is It?

Whole life insurance is a type of permanent life insurance that may provide coverage for the insured’s entire lifetime—as long as the premiums are paid. Unlike term life insurance, which may cover the policyholder for a specific period, whole life insurance includes a death benefit and a savings component. This savings component, known as the cash value, grows over time on a tax-deferred basis. Policyholders can borrow against the cash value or withdraw funds, offering financial flexibility.

How Does It Differ From Term Life Insurance?

Term life insurance may cover a specific period, usually 10, 20 or 30 years. It is generally more affordable than whole life insurance but does not build cash value. Once the term expires, the policyholder may have the option to renew the policy, often at a higher premium, or forgo coverage.

In contrast, whole life insurance may offer lifetime coverage and provide beneficiaries a death benefit regardless of when the policyholder passes away, provided the premiums are paid. Furthermore, the cash value component grows over time, providing funds that can be used for various financial needs.

What Are Its Benefits?

Whole life insurance can offer several benefits that make it a valuable addition to a comprehensive financial plan:

• Help with outstanding debts—Many people have mortgages, car loans and other debts. The life insurance payout can help settle these financial responsibilities.

• Provide additional finances—The policy’s cash value grows over time, providing a financial resource for emergencies, education, retirement or other needs.

• Offer tax benefits—The cash value grows on a tax-deferred basis and policy loans are typically tax-free. The death benefit is also generally not subject to income tax.

• Consistent premiums—Whole life insurance premiums remain constant throughout the policyholder’s life, making it easier to budget for long-term financial planning.

Learn More

If you’re looking for a versatile financial product that may offer lifelong coverage and a range of benefits, whole life insurance is for you. Contact Active Insurance Agency today to get started.