The Benefits of Whole Life Insurance: Building Cash Value and Financial Security
August 15, 2023
Life insurance is an important aspect of financial planning, yet many people overlook it. There are many types of life insurance available, so you may wonder how to choose the right policy. In many cases, whole life insurance is the ideal solution, offering a number of benefits. In this post, we look at some of the advantages of whole life coverage so you can explore its role in the financial security you desire for your family.
Lifetime Protection
The goal of whole life coverage is to provide guaranteed coverage. Term policies only cover a specific and defined period, but whole life policies ensure a death benefit payout that remains in force for your whole life. Investing in a whole life policy provides you with the peace of mind of covering your family’s financial needs whenever your death occurs.
Building Cash Value
Whole life coverage is unique in its cash value generation. These policies accumulate cash value over time from a portion of your premium payments. Any cash value gained on your policy remains tax-deferred until you draw it, providing a means for establishing an emergency savings fund, covering future educational costs, or ensuring sufficient retirement income. No matter how you plan to use it, you can draw from your policy’s cash value when the need arises.
Guaranteed Death Benefit
Another element that makes whole life coverage unique is the guarantee that your family receives the death benefit as long as you pay your policy premiums. This ensures that your family gets the funds you intended to cover any outstanding costs and to sustain their daily needs as they grieve. This guarantee is beneficial when you need to cover outstanding debts, establish an inheritance, or replace your annual income for your family.
Dividends and Participating Policies
Some varieties of whole life policies include eligibility for dividends. As with stock dividends, the ones distributed for life policies reflect a share in the insurance company’s profits. You have no guarantee that your carrier will ever issue dividends for the life of your policy, but many companies have a track record of distribution.
Dividends received can cover your policy premium payments if you wish, increase your policy’s cash value accumulation, or even increase your policy’s death benefit. Consider your options for dividend-bearing policies to further improve your family’s financial security.
Tax Advantages
When you choose whole life coverage, the tax deferral of any cash value can save you significantly. You can allow the cash value to grow and only draw on it later in life when your income places you in a lower tax bracket. Your beneficiaries should receive the death benefit with no tax obligation as well.
As you can see, whole life insurance has many benefits for those looking for comprehensive financial planning and long-term financial peace of mind. Cash value generation, guaranteed death benefits, and the possibility for dividends make whole life policies beneficial for financial planning. Consider a policy such as this for your family’s financial future. Working with an experienced insurance professional helps ensure you get the policy that fits your long-term goals.
About 1891 Financial Life
At 1891 Financial Life, we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs. In 2023, 1891 Financial Life was listed by Forbes as one of "The World's Best Life Insurance Companies."
Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.