Whole life insurance has two components to it. First, there is the insurance benefit itself. Second, is the cash value that accumulates over time. This type of policy is great for younger people who want to have a combination of life insurance, and a savings plan all wrapped up into one policy.
For example, you can buy a policy for $100,000 for a given monthly premium, paid up at a predetermined age, and then not have to pay anymore premiums while still maintaining the same death benefit.
How does this work? Insurance companies work from actuary tables that are based on life expectancy and historical returns on cash investments. Remember, your monthly premium pays for life insurance and a savings plan. The younger you are the lower the premiums will be. This type of insurance is generally paid up when you reach the age of 62, or somewhere in that age range.
Whole Life Insurance Rates:
The rates on these policies are based on two things, your health and your age. In rare cases a person’s occupation may affect their rates, but your occupation has to be something of a high risk nature to really have any impact on rates.
As mentioned, whole life insurance rates are derived from actuarial studies that factor not only the two items mentioned above, but also the gender of the insured. Women seem to have a longer lifespan compared to men, so this factors into the rates too.
Whole life insurance rates can vary from company to company. Shopping around makes a lot of sense these days since there is a lot of competition in the industry. You would think that insurance companies work from the same actuarial tables and most do, but their overall risk portfolio can dictate changes in premiums for various marketplaces.
Whole Life Insurance Quotes:
In the old days, you would have a few insurance agents come over and sell you insurance. You would have to endure the sales pitch just to get a two minuet quote. Those days are gone. You can still call around and get whole life insurance quotes over the phone, or you can make life easy and use the internet at your disposal.
There are websites where you enter the required information and several companies will eagerly return with a quote right to your email inbox. Or, you can use an insurance broker who will utilize their network and filter out two or three good deals for you. This is the easiest way to get competitive whole life insurance quote without having to spend hours sifting through details.
Your insurance broker will gladly guide you through the process and help you make the best decision for your situation. Some people think that using a broker will cost more; however this may not be the case. Brokers are paid by the insurance companies on a referral basis, so it's the insurance company that takes a small hit to get your business.
Whole life is still a viable insurance product. Sometimes simple is better.
Do you own whole life insurance? If so, let us know your thoughts below in the comments section.