Everyone has goals and dreams for themselves and their family. Talking about life insurance isn’t the most exciting or easy topic for some but it’s one of the most compassionate planning you can do for your family in the event of an unforeseen accident or illness.
You may have group life insurance but you don’t own the policy and you don’t keep the life coverage between jobs or when you retire. Acquiring personally owned life insurance when you’re young and healthy can indeed result in lower premiums, which can provide you with more significant coverage for your budget.
Whole life insurance is a valuable financial planning tool that can offer peace of mind and financial security to you and your loved ones.
Features of Whole Life Insurance
- Provides a cash value accumulation that you can borrow against in an emergency or use the cash value later in life to use as paid-up insurance.
- Whole life policies have many options to add family members to your life policy saving you money.
- Whole life policies have options to include term life riders to help cover short-term obligations such as mortgage protection. For example, if you have a 20-year mortgage balance, you can select term riders to fit your short-term obligations, at the end of the term rider the coverage amount ends thus reducing your premiums.
Here are a few popular types of life policies:
Universal Life
Universal Life is a whole life insurance product where the policyholder has the flexibility to modify premiums, impacting both the death benefit and the accumulation of the cash value. This product is more complicated than your typical whole life product but has a range of features and flexibility that many find appealing.
Under the right circumstances, the policyholder can opt to skip premiums or experience vanishing premiums. With universal life insurance, policyholders can not only borrow from the policy’s cash value but can also make permanent partial surrenders. This type of life policy is a very popular product among consumers of any age.
Interest-Sensitive/Market-Sensitive Whole Life
This policy is an interest-sensitive whole life product in which the insurance company can change the premiums or interest rate being credited to the account based on current money market rates. Interest rate changes affect the policy premiums.
The policy has a guaranteed minimum death benefit but may increase based on the growth of the cash value. If the current rates increase, either the policy owner pays a reduced premium or the cash value will increase at a faster rate.
It is possible that the cash value may cause the policy to grow too quickly (before reaching age 100). To prevent this, the insurance company adds extra life insurance without requiring further evidence of insurability.
Equity Indexed Whole Life
The majority of the premiums (90%) are invested in traditional fixed-income securities, while the remaining portion (10%) is invested in stocks and hedges linked to a specified stock index, such as the S&P 500.
When there is an increase in the market, a certain percentage of the gain is used to calculate the interest credited to the policy. When the market declines, the policy is credited with the minimum guaranteed interest rate or zero interest.
The policy values are always protected from any negative impact resulting from a declining stock index performance. This type of life policy is popular for its potential to yield higher interest gains while maintaining a minimum guarantee.
At Cole Insurance and Senior Solutions, we understand that your life insurance portfolio is not a one-size-fits-all solution. We customize your whole life insurance benefits to align with your unique needs and objectives.