There are several times in a person’s life in which major decisions need to be made. Whether choosing a college or career path, choosing a life partner, or any other significant life moment, it is crucial to have a plan in place.
Especially if you are getting married or starting a family, one should begin to think about implementing a life insurance policy for those who may become dependent on your income.
Life insurance, and insurance in general, may be a difficult topic to navigate, but with the right professionals who have all of the knowledge and options made available to you, you can make a proper decision that will best benefit yourself and your loved ones in the event of your death.
There are two main types of life insurance that one thinks about when discussing such: term life insurance and whole life insurance. But, what are the differences?
Mainly, term life insurance covers you for a certain period of time, while whole life insurance policies are guaranteed for life.
Term life insurance may seem more advantageous because of the lower costs, so let’s look deeper into how a whole life insurance policy can provide more peace of mind even with the higher cost.
A whole life insurance policy has several advantages over other policies that may not be immediately known if only cost is considered.
Whole Life Insurance Does Not Expire
A whole life policy does not have an expiration date nor a timeframe in which your death must occur in order to trigger a payout.
As long as the premiums are paid each month, your loved ones are covered whether you die at age 20 or age 120. This can bring peace knowing that your family is taken care of whether your death is out of your control or of natural causes.
Whole Life Insurance Premiums Remain the Same
A whole life insurance policy has a consistent and maintained cost. This means that the premium costs remain the same throughout your life. Other policies may require frequent changes and increases, but this type of policy does not.
You can rest assured that your premium, or the amount you pay for the policy per month, will not change over time. This makes this a budget-friendly option, especially for policyholders with a specific or fixed income.
Whole Life Insurance Builds Cash Value Over Time
Other life insurance policies may not have many benefits for you while you are living, but this policy builds value with every premium payment that you can access even while you are living.
This makes the consistency of your premium payments even more of a benefit, as those will not change even if the cash benefit is accessed.
Whole Life Insurance Pays Out Dividends
A whole life insurance policy pays out dividends or cash payments based on the provider’s financial position.
These payments may not be fixed, but it is just one other benefit to the policy available to the holder that does not increase their monthly premium payment.
You may choose to use these dividends to pay for your premium, coming less out of pocket for the same benefits.
Whole Life Insurance Offers Tax Benefits
The death benefit, when paid out to your loved ones, is exempt from taxes. Also, the amount you pay into the policy can be taken out tax-free, and the growth of your policy is tax-deferred.
All of these benefits affect your end-of-year taxes, so be sure to mention this policy and discuss this with your accountant or tax preparer come tax season. A whole life insurance policy is a stable and secure investment for your loved ones’ financial future.
If you think you and your family can benefit from a policy of this type or wish to discuss your options with a life insurance specialist in Lafayette, contact our agents at Thomson, Smith, and Leach. We are ready to serve you and your family for years to come and provide you with options that fit your lifestyle and budget!