SECURITY CENTER
COLUMNIST / BLOGS
TOOLS
PODCASTS/VIDEOS
How To Invest and Save Money
Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand. |
To determine if whole life insurance is right for you, contact a qualified financial advisor or ask an insurance representative Whole Life Insurance the Alternative to Term Life Insurance By Britt Erica Tunick There’s no question that life insurance is something everyone should have –especially if you have others dependent on the income you generate. But not all life insurance is the same. Most people who purchase life insurance take out what is known as term life insurance –policies paid off through fixed payments over a set period of time, and which pay a fixed amount upon the death of the insured individual. Once payments for a term life policy cease, so too will the coverage of that policy. But there is an alternative, known as whole life or permanent insurance, which can actually be used as a long-term savings vehicle for retirement, education goals or any other big-picture savings goal. Though the ultimate basis for whole life insurance is no different than that that of term life coverage –a guaranteed, set payment for dependents upon the death of the policy holder –whole life policies operate more closely to mutual funds by taking the money paid into them and investing it into specific financial instruments such as indexed annuities. Because the money paid into these funds is invested, the ultimate payout of these policies is higher, is not limited to the insured’s death and can even be utilized by the individual whose life the policy actually covers. Because of these features, whole life policies have actually become a popular savings vehicle because of the security they provide and the fact that they allow the owner of a policy to pull out money that has been paid into a policy, along with any dividends it has generated, without ever having to pay it back. Of course, whole life is not necessarily for everyone. Because of the flexibility of whole life policies and the permanency of the investment made into them, the premium payments for whole life policies tend to be significant higher than their term life counterparts. Whole life policies also carry a tax benefit that allows the beneficiary to receive the base amount of the policy free from federal income tax. One way to look at the difference between term life and whole life insurance policies is liken them to the difference between buying or renting a house. Just as everyone can’t afford to own, the higher premiums of whole life insurance can be a deterrent for individuals not in the position spend that extra amount on insurance. To determine if whole life insurance is right for you, contact a qualified financial advisor or ask an insurance representative to provide you with a detailed comparison of the cost differences and differing benefits between the two types of coverage. |
Archive |