You can pay whole life insurance policies forever or over 10 to 20 years — it’s your choice. But your monthly premiums will increase dramatically should you choose the latter option. The payment schedule you choose greatly depends on your affordability.
We’ll deepen your understanding of whole life insurance and talk more about the payment options throughout this article.
Whole life insurance gives you cover for your entire life. The premium (the money you pay) doesn’t change, so you don’t have to worry about increasing costs — a definite advantage over term insurance.
Moreover, you never had to pass a medical exam to re-qualify! No matter what health conditions you experience, you’ll still have insurance cover.
You also have the option to access multiple riders (extra add-ons to tailor the policy to address your custom needs) that aren’t available on term policies.
The cash value section of whole life insurance is the most exciting — it accumulates money over time and is accessible while you’re alive. And yes, it grows tax-free.
Tapping into the cash value when times get rough is useful, but it reduces your death benefit. So, it’s worth considering the ramifications before withdrawing!
Actual growth varies depending on the policy, and it’ll take a few decades for it to stretch beyond the amount you’ve paid. But that’s only because a fraction of your monthly payment lands in the cash value.
For many, whole life insurance policies are too expensive. However, you acquire attractive advantages such as the permanent coverage and cash value component.
A portion of your premium goes toward the insurance itself when you pay for it, and the rest joins the cash value to accrue more funds.
Generally, people seeking whole life insurance pay for it forever (i.e., until they die). But, you can choose to fund the entire cover in 10, 15, or 20 years. Although, doing so will extortionately raise your monthly premium for those years.
The level of cover you select plays a major role in your premium rate. But other affecting factors are as follows:
The factors we’ve just discussed impact the cost of all types of life insurance, whether whole or otherwise. However, some features specific to whole life policies change the price too. These include:
A term life insurance policy lapses as soon as you stop paying. But it’s not quite so easy to surrender your whole life insurance policy.
If you decide to stop paying, the accrued cash value on the policy funds your premiums until it runs out. At which point, the cover lapses, and they won’t pay your beneficiaries anything upon your death.
However, there are other ways to surrender your whole life insurance policy. Depending on the plan type, your options might be:
Plenty of high-quality Canadian insurance providers of whole life policies. Here are just a few:
Regardless of how you wish to pay for your whole life insurance — be it forever or for 10 years — Sim Gakhar can find your perfect policy. Don’t hesitate to get in touch.
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