My name is Eric Bowman, and if you have questions about insurance, this is the blog you need to read. I was always confused when I had to purchase insurance. I would either end up paying for insurance I didn't need or I wouldn't buy the right policy. I finally decided that I was going to learn all I could about insurance policies so that I would understand exactly what I was buying. Now, I am completely satisfied with my insurance and the coverage is just what I need. I realized that there are others who are probably just as confused as I was, so I am writing this blog to help others get the best insurance for their needs and budget. I hope that my blog gives you the information you need to make the right choices when purchasing insurance.
When you start thinking about purchasing life insurance, you will likely come across a type of policy known as whole life insurance. Whole life is just one of several options you have when buying a life insurance policy, and it is important to understand what this type is before you buy it. Here are several key details about whole life insurance to help you understand what it is and how it works.
It guarantees a payout upon death
One of the top features of a whole life insurance policy is that it offers a guaranteed payout when the policyholder dies. It does not matter when the person dies or why the person dies; however, there are exclusions with some policies. For example, a policy might exclude a payout if the person commits suicide. This all depends on the policy, though. In most cases, it does not matter why the person died or what age he or she was; the policy will offer a payout of the stated amount of the policy.
It generally provides cash value you can borrow
The second key feature of most whole life insurance policies is that they offer cash value that you can actually borrow if you want to. As you pay into your policy, you will build up cash value. If you ever decide to cancel the policy, you will likely receive the cash value from it. If you decide you need cash and want to borrow from the policy, you can also take the cash out of it. You would have to repay this money, though, or it may decrease the payout amount upon death.
It costs more than term life insurance
The other important thing to understand about whole life is that you will probably have to pay more money to get a whole life insurance policy compared to other types of policies. The most common alternative to whole life is term life. Term life lasts for only a period of time, such as 20 years. At the end of this time period, the policy ends and you do not receive payout unless the policyholder died during this time. Because whole life insurance is a permanent policy that lasts for as long as the person lives, it will cost more to get.
These are three important things you should understand about whole life insurance as you prepare to purchase a policy for yourself. To learn more about this type and others, talk to an insurance agent today.