A whole life insurance policy is something that you should consider for your future needs. This type of insurance policy is perfect for individuals who are looking to make a small set payment over their lifetime that works to guarantee a return on the cash value their policy builds.
There are many life insurance policies on the market today. Some other options include term life insurance and permanent insurance. By speaking to a fee-only consultant you can discuss your needs and decide if a whole life policy or another option is best for you.
If you decide that a whole life insurance policy is right for your situation than continue reading. We’re going to take a look at some of the most important factors to consider when deciding on the right whole life policy.
It’s important to realize that some companies offer only small amounts of coverage, others offer just larger amounts, and some offer both. Deciding first on what amount of coverage you want will allow you to be better matched with a company that can provide what you need.
The right coverage amount for your whole life policy depends on what you intend for the money in the future. If you are just looking for a policy that will cover funeral costs, then a small $10,000 policy may be ideal for you. On the other hand, if you want a policy to supply funding, such as trust funds after you pass, you’ll want to secure a much larger policy.
Deciding on what you want out of the policy is an imperative first step. This will give you an idea of the amount of coverage you require and allow you to start looking for the right policy supplier.
Pay Attention To The Approval Process
Different companies will require various aspects in their approval process. At the most basic level, a company will guarantee you automatic approval without any requirement. Other policy suppliers will require you to complete a form with health questions. Some companies may require you to get a medical exam before they can approve you.
On a general basis, those who are currently in good health and who take a medical exam are more likely to receive better coverage. Those who have existing health problems may have trouble getting approved for loftier policies. One other key concept to consider is that many policies will not provide full death benefits if you pass within the first few years of coverage. This should be another factor you take into account.
Understanding what a potential policy supplier requires for their approval process is important. Knowing your current health can help you decide on what type of policy you will most likely be approved for.
Cash Value Rate Of Return
A whole life insurance policy can be an investment. These policies tend to offer a savings account where a designated amount of your monthly payments are invested into a cash value account. This is a tax-deferred account that you can borrow against in the future.
Many policies offer the ability to use the cash value to buy more coverage or to surrender the overall policy in general. Keep in mind that if you do borrow against the cash value of the policy your death benefit will be reduced until you pay back the loan.
Look At The Riders
Riders, known as the extra coverage features, will allow you to customize your whole life insurance policy. A disability waiver is a popular rider that allows you to skip premium payments if you become disabled. The chronic illness rider is an add-on that allows you access to the policy’s death benefits if you get a chronic illness. Take a look at the riders offered by different potential companies to create a policy that is perfect for you.
Once you go through the steps above, you should have a smaller list narrowed down to which companies you will potentially purchase your plan through. Now it’s time to get some quotes. Yes, this can take some time to go through the application process with all potential suppliers, but it will be well worth it.
Getting a whole life insurance policy is an important life decision. By following this informative list above you can better make an informed decision about which type of policy will best fit your goals.