Whole life insurance is a type of permanent life insurance —it comes with a guaranteed death benefit, consistent premiums, builds cash value over time, and can offer dividends. Here are a few circumstances that could make whole life insurance a good choice for you:
You want to leave a legacy
Whole life’s death benefit allows you to leave behind a legacy for your children or other heirs. Because whole life insurance offers lifelong coverage and a guaranteed death benefit, you can be assured that your beneficiaries will receive the payout when the time comes. If you name a charitable organization as your beneficiary, your death benefit can be a donation to a cause close to your heart.
You own a business
Life insurance can be a good idea for business owners in a partnership. The death benefit, often along with a buy/sell agreement, allows one partner to buy out the other partner’s share, should they pass away. This can facilitate a smoother transition during a difficult time for the business.
The cash value of whole life insurance can come in handy for a business as well – you can borrow against it for any reason, including to purchase new equipment or supplies, cover unexpected costs, or take advantage of an opportunity.
You’re a full-time caregiver
Not many family caregivers believe that they need life insurance, but their job is essential for the household to run smoothly. For instance, a stay-at-home parent may perform multiple roles, including cook, housekeeper, and caregiver. For some people these may be lifelong roles – you might transition from taking care of your children to a sick relative. If the unthinkable happens, the family may have to seek professional help to ensure these tasks are taken care of. For this reason, it may make sense for homemakers to get life insurance. The death benefit can help their family deal with the needs of the household if the stay-at-home-parent passes on.
You want a flexible cash reserve
A whole life insurance policy is a way to guarantee you’ll leave your family something after you pass away. It can ensure dependents receive the financial support they need. As an added bonus, the cash value can also come in handy throughout your life, including during retirement. You may already have other comprehensive retirement financial plans in place, but the cash value from a whole life insurance policy can provide an additional layer of security. The cash value grows over time and you can borrow against it for any reason. This can help increase cashflow during a market downturn; it can also help you manage taxes.
The primary purpose of permanent life insurance is to provide a death benefit. Utilizing the cash value through policy loans, surrenders, or cash withdrawals will reduce the death benefit; and may necessitate greater outlay than anticipated and/or result in an unexpected taxable event.
Source: iQuanti
