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Whole life insurance promises a death benefit when you pass away and offers a savings component to use during your lifetime. The life insurance experts at Malhotra & Assoc. Insurance can find the policy your family needs.
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The primary value of any life insurance is the death benefit, which is a lump sum paid out to beneficiaries after the policyholder passes away. In addition to the death benefit, whole life policies have a savings component with a cash value that accumulates over time.
Death Benefit. The death benefit of a whole life insurance policy is considered to be permanent death benefit coverage. As long as the policyholder continues to pay their premiums and the policy remains active, their named beneficiaries will receive the face value of the policy, the death benefit, when the policyholder passes away. This death benefit is usually a breakpoint value of $100,000, $250,000, $500,000 or $1,000,000. Beneficiaries do not have to claim the death benefit with their gross income unless the funds are placed in an account that gains interest.
Cash Value. Cash value is the savings component of a whole life insurance policy. The growth of the cash value is an essential benefit that separates whole life policies from term life policies. You can build cash value by remitting payments more than the scheduled premium or reinvesting policy dividends to earn interest. The cash value can only be accessed by the policyholder within their lifetime. As a policyholder, you can request a withdrawal of funds or a loan. Withdrawals are tax-free up to the amount paid in premiums. Unpaid loans will reduce the death benefit.
Policy dividends can also be used to purchase additional death benefits, increasing the amount you leave to your beneficiaries.
The costs of your whole life insurance policy will be determined by the amount of coverage you choose and your age, medical history, and gender at the time you apply for the policy. Insurance companies take on greater risk insuring your whole life, so whole life policies tend to be higher than term life plans.
Whole life policies last for the lifetime of the policyholder. Unlike term life policies, which cover you for a specified time period, whole life plans have a permanent death benefit. As long as you continue to pay your premiums, your beneficiaries will receive the face value of the policy, the death benefit, when you pass away.
The cash value of the policy offers a living benefit. While you hold your policy, this value can grow along with the market and accumulate interest and even dividends. You can borrow against or withdraw from this cash value during your lifetime.
Whole life insurance is an investment in the future. With a whole life policy you can secure funds for your family and loved ones when you pass away. They can use this money to help pay for your final expenses, medical bills, consumer debt, mortgage debt, and more. Let our team of experts help you find a plan with the coverage you need to protect your family’s financial interests.
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