Pros & Cons of Whole Life Insurance
Whole life insurance is a great long-term life insurance policy with many benefits. However, whole life insurance also has several disadvantages you should be aware of before applying for a whole life insurance online quote.
Benefits of Whole Life Insurance
If you decide to apply for a whole life insurance online quote, you will have taken the first step toward reaping a host of benefits from your policy. Some of the main benefits of whole life insurance include:
- Option to take policy loans and withdrawals on cash value
- Premiums will never increase over the life of the policy
- Some earnings, loans, and withdrawals may qualify for preferred tax treatment
- Guaranteed minimum death benefit
- You receive the cash value if you cancel your policy, though taxes may apply
- The policy's cash value will accrue at a guaranteed minimum rate
- You can receive the annual dividends in cash or apply them toward your policy's cash value and death benefit. In other words, you can use your dividends to purchase additional coverage annually, regardless of your health status
Drawbacks of Whole Life Insurance
Whole life insurance is a well-rounded policy, but it is not for everyone. Before you apply for your whole life insurance online quote, consider these drawbacks:
- Initially, your premiums will be more expensive than those of term life insurance policies. However, your premiums will remain constant for the life of the policy.
- Usually, withdrawals, loans, and unpaid interest on loans reduce the death benefit of the policy, which might leave your beneficiaries with inadequate protection.
- Whole life insurance does not have a conversion option, unlike term life insurance. This means you cannot switch the type of policy you have from permanent to term.
- If accruing cash value is a priority for you, remember that annual dividends on the policy are not guaranteed. You can enhance your equity-building capacity by adding certain riders to your policy with some companies. These will allow you to pay more premiums into equity-based portfolios that are professional managed.
If you have any questions, please visit our Frequently Asked Questions page.