As the saying famously goes, you can’t take it with you. But just because your amassed wealth won’t travel with you into the afterlife doesn’t mean you aren’t leaving loved ones behind that depend on your income to stay afloat. Without your income, a spouse, partner, and/or kids could find themselves in jeopardy of losing a family home or being unable to pay the bills. And when you add end-of-life expenses on top of that (burial, cremation, and perhaps a stack of medical bills), you could be leaving the people you love most in a serious financial crisis in your absence. If you want to protect them from this fate while they deal with the stress and sadness of your loss, it’s best to take out a life insurance policy while you’re still around, and whole life insurance offers several benefits.
The main thing you need to understand is that a whole life (sometimes referred to as universal) policy is, as you might expect from the name, good for your whole life. This means that once you select a policy, it will never expire (unlike a term life policy), provided you continue to pay your premiums on time and in full. In addition, most policies will lock in a rate for the duration of the policy so your payments won’t go up over time. Of course, there’s a bit more to it. The premiums you pay on a whole life policy are generally split up into a couple of parts, including the portion you pay for your actual insurance coverage, as well as an amount that is considered a type of savings. The latter portion is invested on your behalf and may be withdrawn in part or in full during your lifetime (in keeping with policy rules), or doled out upon your death.
How your life insurance policy operates depends on the provider and policy you choose, and there are a number of options from which to select. But the main thing you need to understand is that this type of policy is good for your whole life, regardless of the options you select. As a result, you’re going to pay a bit more for premiums than you would with a term life policy (at least at a young age). The rate you pay will generally be locked in, but it will be determined by your age (when you purchase the policy), your medical history and health, and of course, the amount of money you want to secure as a base payout to your beneficiaries when you pass away.
Because whole life policies tend to come with a higher price tag than term policies right off the bat, the average young adult may want to start with a term policy before switching over to a whole life plan once they are a bit older and earning more money. However, you don’t want to wait too long. The older you get, the more your premiums will increase, and this can be compounded by changes in your state of health. Just make sure you take the time to speak to a qualified insurance agent so that you can view the whole life options that best suit your future plans.
Things would be different when our children have their own income and could be able to sustain themselves even more that that. What do you think, could it be better for us instead of paying premiums for life insurance policy, instead, we prepare our children with better education and health. It is a better thing to leave them behind with those rather than just money right?
Of course this is just my opinion, but if it is strictly an “either-or” type scenario, yes, it would be better to leave them with better education than with money. However, it is important to remember that life insurance helps out with the sudden and usually unexpected costs that are taken on by the deceased’s surviving family members — outstanding debts, burial and ceremonial costs, remaining bills like mortgages etc. Many people find a strong peace of mind knowing that these expenses will be taken care of without an extra thought, allowing the rest of the family to mourn and focus on moving forward. Of course, again, this aspect of “is life insurance right for me” type thinking is just my opinion, but it is one that many of my clients share.
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