What is whole life insurance?

Whole life insurance is similar to term life insurance but carries an additional benefit. Before choosing any life insurance policy it’s important to have the facts right and understand what your options are. One important fact is to understand the differences between whole life insurance and term life insurance. The death benefit may not vary when you compare term life insurance to whole life insurance, but whole life insurance builds up cash value over time.

By investing a portion of the premium you pay, the insurer generates cash returns. In time, you can borrow from the cash value of your policy, use the cash value to pay some of your premiums or even use the accumulated cash value of a whole life insurance policy as collateral to secure a bank loan.

What options are available in Columbia whole life insurance?

Whole life insurance can be divided into three main categories:

• Traditional: Provides the policy holder with a guaranteed minimum interest rate paid on the cash value accumulated in the traditional whole life insurance policy.

• Interest-sensitive: A variable interest rate determined by market factors is provided for the cash value that has built up over time. There is more flexibility due to an option that allows you to increase the death benefit when market forces suit you without any change in the premium.

• Single-premium: This option is possible only for those who have sufficient financial resources. It has the same benefits as the other type of whole life insurance such as tax sheltered cash value.

Advantages over term life insurance

• The cash value accrued by whole life insurance is the major benefit but another consideration is that whole life policies can be continued through your life and have no limited term of coverage.

• The premiums for a whole life insurance policy do not change unless you make alterations or increase the coverage provided by your policy. There is no requirement for any check-ups beyond the initial medical examination required when the policy is first issued.

If you are seeking paths leading to tax savings, whole life insurance may be right for you.

Can whole life insurance be considered an investment?

Insurance agents the professional investment advisers disagree on the value of whole life insurance as an investment. Though it’s true there is a cash value created, the interest rate paid on that cash value is low. Even considering the tax benefits, whole life insurance is not a true investment instrument as money invested elsewhere will yield a higher return. When you need insurance rather than an investment, whole life insurance may be the best choice.

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