When you aim to buy whole life insurance as an investment, this can be heavier than a retirement fund. The term life insurance, as the name suggests must undergo a renewal in a periodic basis. When this is the case, this type of insurance will not be a reliable way to provide benefits for loved ones.
When one undergoes a renewal, there are procedures that may take place such as the medical examination. Moreover, premiums often increase, too. Now, if there are health issues that are involved, many insurance companies refuse to renew the policy. In case they renew your policy, you will most likely have a policy cost that is many times higher than your former policy cost.
In fact, a whole life insurance policy is stable or permanent, stays in force, and sets premiums all through the life of the policy. As long as the payments are made in accordance with the insurance contract, the insurer will have to pay the full amount to the beneficiary in case the insured dies. Moreover, the cash dividends that come from whole life insurance can help lower the premiums or it can also be added to the cash value of the insurance policy.
Commonly, the amount paid for almost all types of insurance will be lost forever unless a claim is being made. The difference of a policies and whole life insurance investments is the ability of the policy holder to get his money back. The money that has been invested in a whole life policy can be utilized for the rest of the person’s life. This he can do by either cashing in the policy after a set of years or by simply borrowing or getting a loan against the cash value.
When one gets a whole life insurance as an investment, this will surely allow him or her to have a forcible type of savings. As a matter of fact, there are many people around who get lots of trouble when trying to start and maintain a savings account. Most of the times, savings are done for good intentions but because of emergency cases, savings are withdrawn, thus, melting that good intention away. But with whole life insurance, a person is forced to save in a secure manner. When emergency cases arise, this can provide collateral so that you can have a loan from what you have saved.
There are two types of whole life insurance policy: participatory and non-participatory. Non-participatory provides secure coverage and an increasing cash value which is based from the payments made. Participatory pays dividends on an annual basis and can also be paid in cash, used as a premium, or simply increase the policy value.