Insurance is built on the idea that you should prepare in case something happens. If you get into an accident, you need to have auto insurance. If you buy a home and something were to happen, like theft or a fire, you need to have homeowners’ insurance to cover the costs. The list can seemingly go on forever. However, there is only one insurance policy that can truly be said to prepare us for something that will definitely happen to everyone, and that is life insurance.
Life insurance helps you prepare your finances in the event of your death. Life insurance is widely considered to be one of the most important insurance policies you get because you are definitely going to die. And if you have a family, the death benefit that the insurance pays out can help supplement your family’s finances and give them the time to pick themselves up. They can then plan for the future without the stress of needing to put off the grieving process in favor of keeping themselves financially above water.
There are a few different options when it comes to life insurance. One of these is called whole life insurance (or permanent life insurance). Whole life insurance offers two key benefits: A death benefit will be paid to the beneficiary upon your death and the cash value accumulated can be used as a savings or be borrowed against while you are alive.
Also, as the name implies, the policy covers you for your entire life. The whole life term is usually appealing to those who want to be absolutely sure that when they die, the policy will still be in effect. However, this policy has some key differences that should be understood before deciding if this insurance is right for you.
The most crucial part of whole life insurance (and the biggest selling point) is the benefit of cash value. The cash value refers to a facet of the policy that works like a savings account. You will pay your premiums and that premium will pay for the policy and some of the money will also build up in this account over time and will be tax-deferred. This tends to start slow and then ramp up as your earnings start to outpace the cost of insuring you. This matters because the money that builds in this account is not part of the death benefit. The money in the account will essentially disappear after you die.
So why is that a selling point? For one, this cash value can be used for anything, such as paying your premiums. Depending on how much your account builds up, you might be able to use the accumulated value to pay off your premium every month. Also, this cash value is guaranteed to build up because it is factored into the premium cost of the policy that you have to pay to keep the policy.
This is a brief overview of whole life insurance and the benefits it can afford you if you are young and want to start soon or if you are older and wealthy and need something to do with your money. Always remember to talk through all your options with your insurance agent. The agents at Spencer Insurance Agency, Inc. can walk you through all the benefits of a whole life insurance policy and let you know whether or not it is the right choice for you! Call us at (215) 885-2200 or visit us online at https://spencerinsurance.com/life-insurance/