With a whole life insurance policy, you will be insured for your entire life as long as you continue to pay the premiums, and it should be an essential part of your financial portfolio. (The death benefits, which beneficiaries can use at their discretion, are also tax free). If you purchase your policy at an early age, you will find that the premiums are generally very affordable and—despite any health problems you may encounter over the years—they will never increase.

Ways of paying your premium

As a rule, a whole life insurance policy requires the insured party to pay premiums as long as the policy is in effect. In certain cases, the policy can be “paid in full” in five years or with one large premium. Generally speaking, if you don’t take the latter step when signing the original life insurance contract, you cannot make a large payment at some later date. However, some insurance contracts include a rider that would allow you to make a one-time, large premium payment or occasional additional premium payments that you will have to make on a prearranged schedule.

Ways of receiving your dividends

Insurance companies usually guarantee that the cash value of the policy will increase, irrespective of their performance or the experience they have in handling death claims. In addition, you can receive your dividends in the following ways:
● they can send you a check in the mail,
● you can use the dividends to reduce your premium payment, or
● you can reinvest you dividend in the policy to increase both its cash value and the death benefit more quickly.

What you should know

If you decide to reinvest the dividends in your whole life policy, its cash value can grow significantly, based on your insurer’s performance. At the same time, the cash value will also be compounding interest while growing tax-deferred. The typical whole life policy can be surrendered for its cash value amount at any time, and income taxes only apply to any gains on the cash account exceeding the policyholder’s total premium outlay. Because of this, many consumers have wisely decided to use their whole life insurance policy to fund their retirement instead of treating it as a vehicle for risk management.

Liquidity of cash values for whole life policies

It is felt that they have sufficient liquidity for investment capital purposes, provided that the policyholder has sufficient financial stability to continue paying the premiums. Because access to the cash value is tax free regarding the total premiums the insured party has paid you can access it as policy loans, which are also non-taxable. Note also that when a whole life policy lapses, taxes must be paid on any outstanding loans, and if the insured should die, the death benefit will be reduced by any unpaid loan balance that exists.

Finally, remember that the possibility of borrowing against the cash value of your whole life insurance policy when the need exists is a definite plus, but as mentioned above, the death benefit will be reduced until the amount you borrow is repaid, and that should always guide any decisions you make. Don’t wait to get a hold of an affordable whole life insurance policy. Check out whole life insurance quotes now!


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