We all know we will die someday. Despite this fact, we do not think about it or worry about death because we have no idea when we will die. I believe this is one of the primary reasons why we do not get serious when it comes to life insurance. The key about life insurance is that it is easy and cheap to get them when you are young and healthy. If we wait too late or wait until we have serious known health issues, then getting life insurance with decent coverage is almost impossible and extremely costly.
Nonetheless, many of us do not like the fact that we have to pay life insurance premium for a very long period of time without receiving any tangible benefit. This is because life insurance is not for the person being insured. All the benefit goes to the beneficiary of your coverage, not to mention the value of the life insurance is guaranteed tax free cash.
If you are one of those who sees any of these as disadvantages of getting life insurance, then you might be better suited for what is called Whole Life. When you purchase Whole Life insurance, the company providing your Whole Life pays dividends, which will grow over time. This growth will in time pay your Whole Life insurance premium. Some people use Whole Life as an investment and add it as part of their investment portfolio.
Unlike the Term Life insurance, where it usually ends after 20 or 30 years of premium payments, the Whole Life insurance will always be available as long as premium is paid when due on annual basis. Most Whole Life insurance premium is fully covered by the dividend earned after 18-20 years of holding on to the policy. For example, the $145,000 policy Whole Life insurance I purchased 10 years ago using Mass Mutual, which I have been paying about $95 per month, will be fully covered after 8 more years of annual payment.
If you currently do not have life insurance policy, then I would recommend considering buying a life insurance, but not for the purpose of investment. The main reason would be to guarantee your loved ones to have additional money in case you die prematurely. Keep in mind that when you buy a life insurance policy, you are usually given at least 10 review days. I would recommend taking advantage of this free period to read and examine your policy. If you absolutely decide you don’t want it after thorough review, then you can always return it for a full return of premium.
Whole Life insurance policies can be expensive so I highly suggest those who are interested perform budget analysis to ensure you can handle the extra monthly payments. If you end up buying a Whole Life policy that fits your budget, I’m very certain you will be glad that you made the purchase after many many years later.