When trying to plan out your financial life, life insurance is one area that you will need to focus at some point. If you have a family to take care of, having a life insurance policy is essential. When it comes to buying life insurance, purchasing a cheap whole life insurance policy is typically one of the best decisions you can make. Buying cheap whole life insurance has a number of benefits that you can’t get from other policies.
1. Cash Value
One reason that you may want to buy a whole life insurance policy is because of the cash value that comes with it. When you pay your life insurance premiums, part of the money goes to the death benefit while another portion goes towards the cash value of your account. Over time, the amount of money that you pay towards the cash value can grow into a sizable amount. Once you pay your premiums, the insurance company takes the part that is designed for the cash value and invested into various securities. The investment funds of the insurance company are managed by a team of professional money managers. They know how to invest and they typically guarantee a specific return on your investment. These returns are guaranteed independent of what happens in the stock market or any other financial markets.
2. Permanent Coverage
Another reason to buy a cheap whole life insurance policy is so that you can get permanent life insurance coverage. With a term life insurance policy, you only get coverage for a specific number of years. For example, many term life insurance policies are for a duration of 20 years. If you outlive your policy, you will have to renew the term policy at a much higher premium or try to buy a whole policy. At that point, it will most likely be very expensive compared to what you could have originally paid.
By comparison, with a whole life insurance policy, you get coverage until the day you die. This makes it a permanent type of life insurance and it is guaranteed as long as you continue to make your premium payments. If you want to make sure that your family has some kind of nest egg when you pass away, purchasing a whole life insurance policy can provide you with these benefits.
3. Not Much More Expensive Than Term
When you buy a whole life insurance policy, it will inevitably be more expensive than what you would pay for a term policy. This is because the term policy does not have a cash value component associated with it. In many cases, a cheap whole life insurance policy will not cost much more per month than a whole life insurance policy. If you buy a whole life insurance policy with a low face value, the difference in premiums between it and a term policy will usually not be that much. Since you’re getting an investment component with your whole life insurance policy and nothing like it with a term policy, it may make sense to opt for the whole policy. You only have to come up with a few extra dollars per month and you can ensure that you have something to show for your policy later in life.
4. Policy Loans
One of the best features of a whole life insurance policy is the ability to borrow against the cash value. As you continue to make your premium payments, the cash value of your policy increases substantially over time. You do not have to cash out your policy in order to gain access to this money. Most whole life insurance policies offer policy loans as a way to tap into the money easily.
With a policy loan, you borrow against the cash value and then pay it back over time with a small amount of interest. These loans are not based on your credit history and they are typically processed very quickly.
Regardless of why you buy whole life insurance, it can provide a number of benefits over other types of life insurance. Just make sure that you shop around and get some quotes from the many life insurance providers that are available in the market before making a decision.