Whole life insurance is a popular insurance policy. And if you are considering shopping for this insurance plan, we advise you to weigh the pros and cons of whole life insurance mentioned below.
Fixed premium: Unlike term the premium of life insurance, the premium of whole life insurance is fixed. This means you don’t have to worry anymore about inflation, your age and your health status so long you pay you’re the agreed premium when due.
Deferred tax charges: This is one of the reasons why the wealthy people and the smart ones prefer whole life insurance. Your cash value is immune to any form taxation except when you want to borrow or withdraw it. This advantage helps your money to grow quicker.
Dividends: Contract holders of whole life insurance have the privilege to receive interest on their cash value. In fact, you can use the dividends, which are not taxed, from your cash value to pay part of your premium.
Guaranteed rate of return: In a word, you are guaranteed of getting your death benefit if you comply with the terms and conditions of the policy.
Expensive: Whole life insurance is three times more expensive than term life insurance as you are expected to pay your premium until you die.
Difficult to get loans: Even though you have the right to borrow funds from your cash value, it may take about 5 years or more before you can access the loan. This is because your cash value must reach a minimum figure, which may take years to build up.
Surrender period: This is the length of time you cannot withdraw your money from the insurance company. Typically, surrender period can be up to 5-10 years. However, if you still want the insurance company to release your money before the surrender period, they may charge you about 10% of your account value.