Understanding Whole Life Insurance
We all probably know what life insurance is, or at least the basics of how it is supposed to work. Even still, not everybody knows exactly why whole life insurance is a distinct, separate ‘type,’ and understanding what it offers can be important if you are trying to figure out the best way of supporting your family after your death.
What is Life Insurance?
Life insurance, if you didn’t already know the specifics, is life coverage that acts as insurance for the death of a specific person. On death, the money paid into it is given to their beneficiaries, with the idea being to support them now that a source of income in their life is gone. Some life insurance plans only have a single beneficiary, while others can name an entire family, but that is entirely up to the person that is arranging for the insurance.
What Is Whole Life Insurance?
Whole life insurance is usually what people think of when they just say ‘life insurance’ because there are actually two main types. The first is term life insurance, which only covers a specific period of time – for a lower price, you could set up life insurance that covers the next twenty or thirty years of your life. These can sometimes be renewed or extended into lifetime insurance, but not always.
Whole life insurance is very different. It is a payment plan that extends to cover the entirety of your life, only ending once you die. While it can cost more and is meant to keep going until your death, it also doesn’t have that same time limit and doesn’t need to be extended later on. This kind of life insurance can also sometimes cover more causes of death and might be easier to get at an early age where sudden deaths are far less likely.
How Much Does it Cost?
Like most kinds of insurance, the premium price can depend on the condition of the subject in question: in this case, the person that the insurance revolves around. If you are in good health, aren’t very old, and don’t have a history of poor family health or financial troubles, it becomes much cheaper to get this kind of life insurance. If you are sick, already suffering from possible health conditions, and your family has had to claim health-related insurance relatively often, the price goes up, and you might even get rejected outright.
While whole life insurance will always cost more than term life insurance, mainly due to the cash value build-up involved, but you can lower the costs if you have a good record of health and finances. Some agencies might also ask for details about your career or living conditions to get an idea of how healthy you will be in the near future.
How can I get whole life insurance?
Getting a whole life insurance quote from insurance agencies isn’t hard, although you are likely have to give them some personal details so that they can check you against their underwriting criteria. If you want to make the process easier, premiums price comparison websites can make the process faster by showing you estimated whole life quotes from multiple companies, as well as giving you a way to reliably filter through them.
Whole life insurance can be costly, meaning that term life insurance may seem like the more attractive option, but they are both worth considering if you are serious about supporting your loved ones. Each of them has upsides and downsides, but it depends on your current age, level of health, and how much you worry about unexpected deaths.
Do I need whole life insurance?
Whole life insurance can be a good investment in some situations and risky in others, so you need to look at your situation objectively. Life insurance acts as a replacement for the financial income that you might be giving to your family, and it will always be paid out on your death – never before. While it might seem morbid, your chance of death can be a major part of the decision, since it is the event that triggers the insurance pay out.
If you are already considering getting some form of life insurance, take a look at some whole life quotes and get an idea of what you might have to pay. It is good to be informed, regardless of which option you end up choosing in the long run.