When I became a first-time mom at the age of 25, I was told that getting life insurance was the responsible thing to do. I did not understand that there were different types of insurance I could purchase so I simply went with the recommendation of my agent.
It turns out that I purchased a whole life insurance policy, and I did not understand the incredible value of my policy until years later. Becoming a life insurance agent made me appreciate my original whole life policy and the fact that my premiums were locked in and based on a healthy 25-year-old. I certainly did not understand the difference between a whole life insurance policy and a term policy.
Fast forward almost 15 years to when I became a life insurance agent for Hermann Sons Life. In my agent training someone finally explained life insurance to me in a way that made sense. I was told to think of whole life insurance in the same way you think of buying a house. Whole life insurance builds cash value the same way a house builds equity, and you can eventually pay off your home and life insurance policy. Term insurance is more like renting an apartment because it only provides a roof over your head for the length of the lease and then you leave it behind similar to when your term life policy ends. More recently, someone explained insurance to me in a different way and it went like this: whole life is for when you pass, term is for when you might pass, and work insurance should be considered as bonus insurance.
Once I started at Hermann Sons Life, I purchased a 20-year nonrenewable term policy which has provided me and my family incredible protection over the years, but at the blink of an eye my 20-year term is almost over. Luckily for me, term policies from Hermann Sons Life are convertible to whole life insurance without medical underwriting or proof of insurability. If I convert some or all of my term policy to whole life, my whole life premiums will be based on my current age. While I want to take advantage of converting my term policy to whole life insurance, I now understand that insurance premiums are always based on your age and that my original whole life policy with premiums locked in at age 25-year-old rates is a fraction of today’s rates based on my current age for a term policy conversion.
That being said, all forms of life insurance equal protection for your loved ones but having whole life in place for your whole life is incredibly valuable.
There are several benefits that make whole life insurance valuable:
• Lifetime Coverage: Unlike term life insurance, whole life insurance provides coverage for the insured’s entire life.
• Cash Value Accumulation: Whole life policies accumulate cash value over time, which can be borrowed against or withdrawn in the event of surrendering a policy.
• Fixed Premiums: Premiums for whole life insurance remain constant and locked in based on the applicant’s age at the time of purchase.
• Death Benefit: The death benefit is guaranteed and will be paid out to the beneficiaries upon the policyholder’s passing.
• Tax Advantage: Beneficiaries receive the death benefit without any tax consequences.
• Estate Planning: Whole life insurance can be a useful tool in estate planning, helping to cover estate taxes and ensure that heirs receive a specified amount.
Whole life insurance is generally more expensive than term life insurance, but never having your premium increase and knowing that your policy’s death benefit will not go away at the end of a term is very reassuring. Whole life insurance provides a combination of lifetime coverage, cash value accumulation and fixed premiums.
All forms of life insurance provide protection and peace of mind. When evaluating your life insurance coverage keep in mind that whole life insurance is for when you pass, term insurance is for when you might pass and life insurance through work is simply a bonus on top of your existing insurance.
For more information and to contact an agent, please call 866-437-6266.