Is Whole Life Insurance Worth It?

August 10, 2020 13:40 newlambertagency

In your otherwise busy lifestyle, there comes a time when you wonder about taking an insurance policy- it could be to safeguard your family or just to have a secure retirement plan. But when you sit down to Google about a policy that’ll offer the protection you desire, you’re immediately bombarded with terms you may not understand.

There is more than one type of insurance policy so naturally, it results in confusion. But if you find yourself wondering about Whole Life insurance, then we may be able to guide you and put an end to your confusion.

What is a Whole Life insurance policy?

Whole life insurance is a type of permanent life insurance, which means the insured person is covered for the duration of their life as long as premiums are paid on time. Permanent life insurance is different than term life insurance, which covers the insured person for a set amount of time (usually between 10 and 30 years).

Whole life insurance is the most common type of permanent life insurance policy that people purchase. They also cost more because they include an extra savings component, which is referred to as the “cash value”, which brings us to the next question, is whole life insurance worth it? Read on.

How do they work?

There are 3 major components of a Whole Life insurance policy:

Death Benefit: As the name suggests, the death benefit is a tax-free amount of cash which is paid out by the insurance company after you die. For instance, let’s say you bought a whole life insurance policy with $100,000 in coverage, then that $100,000 becomes the death benefit.

Beneficiary: A person that receives the death benefit is the beneficiary. Anyone can be your beneficiary- be it a spouse, children, a business partner, a friend, trust or organization etc.

Premiums: The amount of money you pay for your whole life insurance policy – payment could be made monthly or annually.

As the name implies, a Whole Life insurance policy lasts for your life as long as the premiums are being paid on time. That means if you buy it when you’re 30 and continue paying your premiums until you die, your family will receive the death benefit.

How does cash value work?

Cash value is your ideal volatility buffer for uncertain economic times and financial emergencies. That means a whole life policy can serve as a source of emergency funds for you if something goes wrong, or you may be able to take out a loan against the policy.

Over time, the cash value of your policy increases, and you may have the option to withdraw funds or borrow against it. The rules on how and when you can do this differ from company to company and the policies they offer.

The cash value of a policy earns interest and grows over time. Life insurance companies often guarantee a certain amount of growth every year and that is why people flocked to buy whole life insurance following the 2008 recession.

Hope the above information answers your burning question – is whole life insurance worth it?

You can always consult an agent for guidance and choose a policy that suits you the best.

Steps to Buying Whole Life Insurance

July 21, 2020 11:37 newlambertagency

We as humans love to plan everything. We love the comfort of a pre-planned schedule and we derive comfort from the idea of an ideal future. But even as we’re busy making plans for our lives there always comes a time when we think about life insurance – whether it’s the right time? Which type of insurance is beneficial? What exactly is whole life insurance?

Well, you’re not alone! But as you mull over all the options you’ll find that when it comes to buying whole life insurance, you’ll need some assistance.

Not to worry as we have curated a detailed list of steps to follow when going for whole life insurance.

What is whole life insurance?

Before you decide to settle on whole life insurance coverage, you need to know what exactly does it stand for. Whole life insurance is a type of permanent life insurance (also called cash value life insurance), which is one of the two major categories of life insurance the second major being term life insurance.

The biggest difference between these two categories is that term life insurance ends after a set number of years; it offers a death benefit and nothing more. Permanent policies like whole life insurance, on the other hand, cost more because they include an extra savings component, which is referred to as the “cash value.”

Choosing the right company

There are a plethora of companies that sell whole life insurance. While some are better than others, each one will appear to have something unique to offer.

You must begin by filtering out the clutter to make a list of companies that you deem to be appealing and then compare the pros and cons to make a final decision.

When comparing companies, the details could be daunting but their financial strength rating should be your top priority – this shows here the company stands at present.

You need to also find out what the dividend payout is and whether the policy will accumulate a cash value.

Asking the right questions

Even if you skimmed through the list of various companies to select the right one for you, you must ask the right questions. The last thing you want to do is purchase a policy without being sure of the whole life insurance benefits.

Prepare a set of questions beforehand when you set up a meeting with the insurance provider – this will help you make the right choice.

Get illustrations

After landing on the preferred company, it’s time to layout the final details of buying a policy. You can decide on a policy by analyzing your personal needs and budget.

However, you need to be aware that the final price could change based on your medical exam.

You need to have a clear agenda on what will happen next. From there, review each step for potential roadblocks. For example, you may realize that a medical exam could turn up that you’re a smoker and that could result in an increased premium.

Activate your policy

After going through the tedious process, it’s finally the time to activate your whole life insurance. Make sure you receive the details of the policy one final time before you make the purchase.

Carefully go through the details such as the coverage, including the death benefit, as well as the premium. It’s alright to not move forward if you’re unsure about something and need assistance from the agent.

The last step is making your first payment. Speak with your company about your options for making payment – online, credit card, over the phone, check. Choose as per your preference.

Buying whole life insurance can seem overwhelming and that’s why you need to remember communication is key. You’re entitled to ask about any minute detail that seems to be clouding your judgment and get it cleared from your agent.

Hope the aforementioned steps help you find the right company and policy that makes you worry about the future a little lesser.

Term Life or Whole Life Insurance: Which Is Right For You

June 23, 2020 12:14 newlambertagency

Life insurance can be very confusing. With all complex terms used by insurance providers, it can be very daunting for an average person to choose the best type of life insurance.

Deciding whether to purchase whole life or term life insurance is a personal decision that should be based on the financial needs of your beneficiaries as well as your financial goals.

Life insurance can be a very flexible and powerful financial vehicle that can meet multiple financial objectives, from providing financial security to building financial assets and leaving a legacy.

Read on to understand how to choose the best life insurance for you.

Let’s look at the 2 major life insurance policies:

Term life insurance

Term life insurance is “pure” life insurance. The policyholder pays premiums regularly. If they die while the policy is in effect, their beneficiary (or beneficiaries) receives a death benefit.

It’s very straightforward, which is the selling point for people who want a simple life insurance option.

The key definition when it comes to term life is the term – how long the policy is active. Term life policies expire after a set number of years, making them good policies for anyone who expects to build wealth over time and won’t need the financial safety net life insurance provides later in life.

Term life insurance is also relatively inexpensive. Because there aren’t any additional fees or maintenance, it’s much more affordable than whole life.

So if you’re looking for an optimum family life insurance, Term is the way to go.

Now let’s look at the other side of the coin.

Whole life insurance

Whole life insurance is a type of permanent life insurance, which stays in effect for as long as you pay the premiums. This means you never have to worry about uninsurability or losing your safety net as you get older.

Whole life is more complicated than term overall, but one definition you need to know is the cash value, which is an investment-like product coupled with the insurance policy.

Each month, a certain portion of your premium will go into a tax-deferred savings account or the cash value of the policy. (The exact amount that goes into savings is determined by your policy.) The policy’s cash value grows over time.

You can do many things with the cash value, including taking out a loan, drawing from it for retirement or funding the policy.

There’s also universal life insurance which is a type of permanent life insurance. With a universal life policy, the insured person is covered for the duration of their life as long as they pay premiums and fulfil any other requirements of their policy to maintain coverage. Like many permanent life policies, universal life insurance combines a savings component (called “cash value”) with lifelong protection. When you pass away, the policy’s death benefit is paid out to your beneficiaries.

If you’re looking for a straightforward policy that is affordable and can be cancelled without losing any value, then you should consider Term life insurance.

And, if you’re looking for a customised policy that doesn’t expire and works as a forced saving vehicle, then Whole life insurance is what you need to consider.