Saturday, 25 July 2020

The Benefits Of Whole Life Insurance

Are you trying to figure out whole life insurance is a good fit for you?. By the end of this article, you're going to have five benefits of whole life insurance that'll help you make your decision. If you struggling to figure out if whole life insurance is a good product for you to buy, then here are five benefits to help you make that decision.

1. Control

When you have a whole life insurance product, you are signing a contract between yourself and the insurance company. This means that this is a private contract between you and the insurance company, which is a huge benefit for you because that means you are in complete control. Unlike a lot of financial products that are out there, if you do sign a contract between yourself in another financial institution, you don't necessarily have control as far as what happens with your account, and how you can best manage it. So with a whole life insurance product, you have complete control over the policy, and you can access it to your desire without penalties or issues as far as however, you want to use it. I have a mentor that tells me all the time that you don't lose money until you lose control of it, so the nice thing about this whole life insurance contract is that you maintain control throughout your entire life.

2. Cash Value

Every single time that you make your premium payment, cash value accumulates inside your policy. Now the nice thing about having this cash value accumulate inside your policy is the fact that you earn a guaranteed 4% interest on this money. There are two ways for you to access this cash value that's earning this 4% interest. That's throughout withdrawal, or through a loan. Here's the cherry on top. If you access this cash value through a loan, you do not disturb the compounding inside this policy. This is amazing because this allows you to be in two places at once depending on how you use these funds. You do have access to it through withdrawal, but through withdrawal, you reduce the cash value inside your policy because you have it in hand. Those loans, you're collateralizing the cash value getting a loan from the insurance company, which leaves your money undisturbed earning the guarantee compound interest rate.

3. Dividend 

This is the non guaranteed portion of your contract premium, which is the dividends that are paid to you. Now as long as you work with a mutual insurance company, you could possibly be paid a dividend each year. What a dividend is, is at the end of the year when the insurance company is profitable, and they've paid all of their expenses, whatever is left, is returned back to the policy owners in the form of a dividend. So we call that a return of premium. And due to the IRS how this is classified, you are not taxed on these dividends, so that's another bonus point or feature of a whole life insurance policy is the fact that you are paid a dividend. And that dividend is amazing because you don't have to do anything, just have a policy and you are able to share in the profits of that company through the forms of a dividend.

4. Riders

Rides are additional features and benefits that can be added to your policy for your specific needs. Let me give you a few examples, of additional riders. 

Terminal Illness Riders

If you have this attached to your whole life insurance policy, and you're diagnosed with a terminal illness, a portion of your death benefit can be utilized to take care of your medical expenses. 

Chronic Illness Riders

These riders attached to your policy, and you are diagnosed with chronic illness, then a portion of your death benefit can be utilized to take care of your medical expenses while you're still living. There are so many different riders out there that you can explore, those were just a few that I mentioned, but there are others that will help determine how your death benefit is paid out to beneficiaries. 

5. Tax Benefits

Because you put in after-tax dollars into a whole life insurance policy, the cash value grows at a tax-free rate. Now, what did this mean for you, all the years that you have your whole life insurance policy, you are not going to be taxed on any of that growth, nor the cash value that you utilize as long as you request a loan? And the nice thing about adding after-tax dollars into your whole life insurance policy is the fact that you know where taxes are right now, you have no idea what taxes are going to be in the future.


Now that you know the five benefits of whole life insurance, do you know how to use your policy? Because you can actually use it right now today while you're living by accessing the cash value inside your policy. Because the thing that you need to know is that, you can use your policy right now today, and you don't have to wait years in order to access your cash value.

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