Whole life insurance is designed for just exactly what the name implies: You keep it for you ‘whole life’. While this type of life insurance is much more expensive to purchase than other types of life insurance, such as term life, whole life insurance offers different benefits for the policy holder over other less expensive types of coverage.
Whole life insurance benefits over term life
One of the main benefits of whole life insurance quotes has over traditional term life insurance is that each month when you pay your monthly premiums, part of your monthly rate can either be used to purchase more insurance, or can accumulate inside of the policy and grow the actual cash value of your policy. These are called ‘Paid Up Additions”. The reason that so many people like this type of a policy is because they can actually use the accumulated cash inside the policy as their own personal bank. Some people refer to this concept as “Infinite Banking” or “Bank on Yourself”. On top of providing a death benefit to the beneficiaries of the policy after the policy holder dies, while the primary insured is alive, he can use the cash built up inside the policy for any of his own wishes. He can draw the cash value out at any time, or he can borrow against it. That that means is that he can use the cash amount built up inside of the policy as collateral for a loan from the insurance company.
Why would anyone want to do that?
Well, when you borrow against the cash value in your policy, your money actually stays in the account. You still have your money. The insurance company sends you a check for the amount that you have requested and they will charge you interest on your loan. The great thing is, they can’t charge you any more interest on your loan that what the policy is earning in interest. So the interest is a complete wash. It basically turns into a no interest loan, and your policy still has the same cash value as it did before you borrowed the money. This is what a lot of wealthy people do.
What happens if I die without paying back the loan?
If you die before the loan is paid back to the insurance company, and outstanding debts are subtracted from the death benefit when the benefit is paid out to the beneficiaries. There are many other types of benefits to whole life insurance. To receive a free quote from an agent near you, simply enter your 5 digit postal code in the form above and click the button. Whole life insurance quotes may be more expensive, but for a lot of people, the benefits of this type of policy far out weigh the monthly costs.