Whole Life Insurance: A Good Way to Plan Ahead

by : Adam Douglas

In today's economy, it's a struggle to survive from one paycheck to the next; thus, many feel that they are unable to plan for the future. No one knows what may be to come. However, one thing is certain: no one is exempt from the possibility of mishaps. Everyone should try to save a little, whether for retirement, the kids' college tuition, or just the proverbial 'rainy day'.

It's impossible to predict exactly what will happen in the far-off future. However, one can plan to have funds available, in case they should be needed at some point. Investing wisely to secure your financial future, and that of your family, is always a good decision. One time-tested investment measure is the purchase of life insurance, which can help to make sure that your family's financial needs are met, even if you're not there to provide for them yourself.

A wide variety of life insurance options is available; 'term life' and 'whole life' are widely popular types of policies. Term life insurance covers only a particular time period. Whole life insurance, on the other hand, covers you for the rest of your life, so long as the premiums are paid. In addition, whole life policies have certain other advantages over term life policies.

One such benefit of whole life insurance is that when the policyholder dies, the beneficiaries receive all of the death benefits, regardless of the timing of the death. With term life, however, the family receives the death benefits only if the death occurred during the policy period. Oh, the term life policy ran out last week, wasn't renewed, and the policyholder died today? Too bad - the policyholder's family will receive nothing. Since whole life policies don't expire, one needn't worry about remembering to renew them - or about getting the nasty surprise that a policy wasn't renewed when it should have been.

Many insurers offer excellent whole life insurance policies at a surprisingly affordable price. Moreover, a whole life policy purchaser may be able to obtain a 'level premium' option, in which the price per month is based on the average cost of the policy, stretched out over the expected life of the policyholder. This may mean that you have to pay a bit more up front than you'd prefer. However, because the premiums never change, it's easy to budget the payments, and you won't face a situation where your premiums go up shortly before maturation of the policy to such an extent that you lose the entire investment - as sometimes happens with term life.

A final reason why some prefer whole life insurance over term life insurance is that you can borrow against the policy, use the cash value of the policy as collateral for a loan, or cash out the policy in advance. This comes in handy when funds are needed in an emergency, or for a large purchase, such as a car, or a down payment on a home. Borrowing against one's insurance policy is often less expensive than taking out a bank loan, because interest rates through your insurer are usually much lower than the rates charged by most banks. These and other benefits are solid reasons why purchasing whole life insurance is a good investment decision.