Whole life insurance may cost a little more than term life coverage, but it also has some extra living benefits that you should know about. A whole life policy is intended to provide you with a level death benefit that lasts for as long as you pay your premiums. Unlike a term policy that can expire in 10, 20 or 30 years, a whole policy is designed to provide lifelong protection.
It also does a lot more than just provide your loved ones with a death benefit. There are quite a few living benefits of a whole policy that many people aren’t aware of.
A whole life policy differs from a term life policy in that it actually accumulates cash value. As you pay in premiums, this amount will grow annually. Typically, most companies will allow you to access the cash value of your policy after it’s been in force for a few years. In the event that you have an emergency or an unplanned expense, you can access your cash value if you need it.
Use It as Collateral
Many banks will allow you to use your whole life policy as collateral on a loan, particularly if you’ve built up quite a bit of cash value. This allows you to take advantage of the cash value on your policy, without having to worry about taking it out. In some cases, you may need to assign the bank as a beneficiary on your policy in the event that you die before the loan is paid off. For many young couples, this is a great option for getting help with a down payment on a home.
Increasing the Death Benefit Without Extra Premiums
One of the often overlooked benefits of a whole life policy is that you have the option to turn that cash value into an increased death benefit, without having to pay any extra premiums. Here’s how this works. Once you get your policy, you will want to select the option to let your cash value accumulate toward the death benefit. Every year, your death benefit will increase, but you won’t have had to pay any extra premiums for this option. For example, if you have a whole life policy with a $50,000 death benefit and you’ve chosen this option, in 20 years, your death benefit could be substantially more than $50,000 and you won’t have paid any more out of your own pocket.
Want to know more about how a Laredo life insurance policy can help protect you and your loved ones? Give Raymond Longoria Insurance a call today at 888-296-0345 to discuss your options!