Life insurance serves many purposes. While most people only associate life insurance with death benefit payouts, the advantages of having a good whole-life policy go much further. They can be quite effective as part of an investment package if you are looking to improve your long-term financial stability. Whether you want to invest in stocks or create an emergency savings account, you will be able to start building for a brighter future.
Two Parts of a Whole Life Policy
A quality whole life policy is made up of two parts. Each one is independent of the other, but when paired together, it provides you with a financial product that will help you establish a sound financial foundation. With every premium you pay, part of your premium will be invested in a tax-deferred account. This will help to build cash value. Over time, the cash value will continue to build, and when it builds high enough, you will be able to draw money from the account in the form of a cash advance or a loan. These loans don’t need to be paid back; if you choose to make payments, you will be able to borrow from them again.
When Is a Whole Life Insurance Policy Worth the Money?
If you want a life insurance policy to pay your final expenses, a whole life insurance policy probably isn’t for you. A whole life insurance policy is a good option for someone trying to plan for their family’s financial future. The cash value option combined with your life insurance ensures that your policy is valuable to you when you are alive, just as much as to your family after you pass away.
Drawbacks of a Whole Life Policy
One of the biggest drawbacks of a whole life policy is that the premiums are much higher than a term-life policy. Another key drawback is that the money in your cash accounts is only tax-deferred if it remains in the account. As soon as you draw it out, it becomes taxable. This may affect your death benefit payout as well. It’s important to understand the features each part of the policy has to offer.
Need Help with Tax Insurance? Contact Steve Wilk Insurance
Before buying any life insurance policy, you must gather all the information you can. Contact the agents at Steve Wilk Insurance Agency to learn as much as possible. Ask questions, find out how each type of policy works, and understand which suits your need the most. Being knowledgeable allows you to make an informed decision. Contact us today!