If you have a family, you want to protect them at all costs. You want to drive the safest car and buy a home in the safest neighborhood. But what are you doing to ensure their financial security?
One of the best ways to secure your family’s future, but choosing the right type and decision Buying can be confusing. Read below to learn more about how whole life insurance works and how to buy a policy.
If you’re in the market for life insurance, you can start by getting a free price quote so you know exactly what to expect.
What is whole life insurance?
A permanent insurance policy with two components: a death benefit and a . The death benefit is the amount your beneficiaries will receive if you die while the policy is active.
Cash value is an amount that builds up in the policy over time. It usually takes several years to accumulate enough cash value. Once you have a decent cash value, however, you can withdraw it or borrow against it. Some consumers use cash value for emergency expenses. It can be usedDo household repairs or many other things.
How to buy whole life insurance
The first step is to determine how much life insurance you need to purchase. Whole life insurance is typically sold in $50,000 or $100,000 increments, depending on the company. For example, if you need $325,000 in coverage, you’ll usually have to choose between a $300,000 or $350,000 policy.
After you decide the policy amount, you can apply for coverage. A life insurance application will include demographic, medical and lifestyle questions. After you submit the application, the insurance company will conduct its own investigation to verify your medical records.
Once the investigation is complete, the insurance company will approve, deny, delay or counter-offer your request. If you are approved, you will have a firm deadline to activate the policy and start making payments.
A policy may be denied if you have extensive underlying health conditions or lifestyle choices that are a red flag for insurance companies. For example, if you are currently undergoing cancer treatment or go skydiving frequently, your application may be rejected.
If your request is delayed, the insurance company may delay the approval for a certain period of time. This usually happens if you are scheduled for surgery or another medical procedure. After that event occurs, you can request the insurance company to review your application again.
“A counteroffer probably means they’ve found something they don’t like and are revising the application,” says financial planner Dustin G. Suttle, CFP at Suttle Crosland Wealth Advisors “This could mean raising premiums, reducing face value or adding exclusions, such as excluding private pilots from flying.”
You can get a free price quote online now to see what you qualify for, or you can use the table below to start comparing providers.
Who needs whole life insurance?
Individuals who wish to leave a legacy to their family can purchase whole life insurance. Wealthy families who worry about estate taxes often buy a policy to protect their beneficiaries. This mostly applies if you are gifting assets that are difficult to sell but will result in estate taxes.
“You can use the death benefit from life insurance to avoid selling any ownership of that asset or other assets,” says financial planner Kevin Lau, CFP of Imagine Financial Security, LLC.
Many prefer to buyrather than the whole because their family’s financial needs will decrease as they age. But this is not true for everyone. For example, if your spouse has a pension that will expire when they die – and you rely on that pension to cover your expenses in retirement – you may need a whole life policy instead of a term policy.
Some parents buy a whole life policy for their children when they are born just in case they develop a serious illness or condition that later makes them uninsurable.