Why Whole Life Quotes?
Why would you want to get whole life insurance quotes?
Whole life insurance used to be, and to some still is, one of the most comprehensive types of life insurance that you can buy.
It is more expensive than most term policies but to some people may be worth the extra dollars.
Let us take an in depth look at what is good about whole life insurance and what are the pitfalls.
If you were to request whole life insurance quotes from your agent you would notice quite a difference to the now quite popular term life insurance policies. Whole Life Death Benefit
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Whole life insurance has a death benefit just like any term policy. The death benefit remains level for as long as you own the policy. The great advantage is that you can keep this policy for the rest of your life.
It can never be taken away from you. All you have to do is pay your premiums and you will be able to keep that policy…even if it is to age one hundred.
Participating And Non Participating Whole Life Insurance
When requesting whole life insurance quotes you should ask if this policy is a participating policy or a non participating policy. What is the difference? Well, a non participating policy does not earn dividends.
It has a guaranteed cash value but pays no dividends. Non participating policies are usually less expensive policies.
Participating policies are more expensive than non participating policies and they pay dividends. If the company performs well the policyholder of this type of policy will earn a dividend. Here is how this works…
Term insurance is pure insurance…that is death benefit only. The extra premium charged for a whole life policy is an overcharge from the beginning.
When the company sees that they do not need the extra premium in the first place they return the premium to the policy owner in the form of a cash value. This cash value earns a dividend which is paid to the policy owner.
You get your whole life insurance quotes, you decide this is the type of policy you want to purchase, and you purchase your policy. When you get your policy in your hand you will see a section called dividend options. Here is how they work.
- You may choose to take your dividends in cash. Each year, usually at the anniversary of the policy, the company will send a check for your dividend.
- Another choice is to leave your dividends to accumulate interest. When compounded at interest this can amount to a large sum over the years.
- This dividend can be used to reduce premiums. If you elect this option your annually outlay can be considerably lower especially after the policy has been in force a few years.
- Dividends can be used to purchase paid up additions. Paid up additions are paid up policies…the same type as the original whole life policy shown you in your whole life insurance quotes.
When an insurance company says a policy is paid up…it means that there is no need to pay any additional premiums ever. So, the additional insurance that the dividend will purchase are small policies that are totally paid up.
This is a very good option because these paid up additions also have cash values and earn dividends.
It is important to note that dividends are not guaranteed. When a policy illustration is prepared for whole life insurance quotes it must be clearly stated that these dividends are not guaranteed.
An insurance company can only show you what they have done in the past. Your actual dividends earned on your policy may be less or more, depending on the investments and expenses of the company.
You might have heard talk about policy loans. When your policy has been in force for a few years, it would likely have accumulated a cash value. Approximately 80% of this cash value can be taken from the insurance company in the form of a loan.
All you need to do is apply for it…you do not have to tell them why you need it. You do not even have to repay it, although it would be wise to do so, as the company will charge you interest on the balance. This will reduce your death benefit.
Automatic Premium Loans
Let us suppose 5 years down the line you find yourself in a situation where cash is tight. When you own a whole life insurance policy you can afford to miss a few premiums and the policy will still remain in force.
This is referred to as an automatic premium loan. It is actually a loan taken from your cash values…and used to pay premiums. As interest is also charged on this it should be repaid.
Much of what I discussed with you above you will not see when you get your whole life insurance quotes online…but you will see it all in the policy itself. Now you are ready to get your whole life insurance quotes.
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