With whole life insurance, you can typically receive coverage for the rest of your life as long as premiums are paid. Not only can your loved ones receive a death benefit payout if you pass away, but you can also build cash value over time. Therefore, a whole life insurance policy may be a good option to consider, even though it’s more expensive than other types of policies. Keep reading to find out what whole life insurance is, how it works, and whether this permanent life policy works for your unique budget and needs.
Whole life insurance offers lifelong coverage if you continue to make your fixed premium payments. No matter when you pass away, your beneficiaries will collect a guaranteed payout or death benefit. You’ll also be able to build cash value, which will accrue interest over time and could potentially be borrowed to use while you’re still living.
Depending on your situation, whole life insurance can be a smart choice. If you want coverage for the rest of your life, it may help give you some much-needed peace of mind. This policy can also be worthwhile if you like the idea of predictable premiums that typically won’t change over time and a cash value account you may be able to access through a withdrawal, loan, or by surrendering the policy. In addition, you may want to consider a whole life policy if you’d like to diversify your investments or leave an inheritance.
Term life and whole life insurance are two popular policy options that are available through Aflac. If you opt for term life insurance, your beneficiaries will receive a death benefit payout if you pass away while the policy is in effect. Usually, this type of policy lasts 10, 20, or 30 years. Since there is no cash value component and the policy might expire without providing benefits, term life insurance typically comes with lower premiums than a whole life policy.
Whole life insurance, on the other hand, will cover you throughout your lifetime, rather than a set period of time. It pays out a guaranteed death benefit amount and comes with a cash value component you can tap into while you’re still alive, under certain circumstances. Due to its lifelong coverage and cash value account, a whole life policy comes with higher premiums.1
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Before you move forward with whole life insurance, consider the following:
Think about who you would like your life insurance policy to cover and for how long. If your dependents will only require your financial assistance during a set period of time, term life insurance might make more sense. But if you have a dependent with a disability who will need lifelong coverage, for example, whole life insurance may be a better fit.2
If your primary goal is to help protect your partner and children financially with a death benefit in the event you suddenly pass away, term life insurance may be your best bet. However, if you’d like to diversify your investments or leave a legacy, whole life insurance with cash value might be the ideal option.
Take inventory of your debts, which might be your mortgage, car loans, and student loans. Whole life insurance may be worth it if you have several large debts that will take a while to repay.
Figure out how much you can spend on a life insurance policy each month. If you’re okay with higher premiums in exchange for lifelong coverage and a cash value account, whole life insurance may be a viable option. For cheaper coverage, you might want to consider a term life policy instead.
Whole life insurance might be worth the extra money in these situations:
If you have lifelong dependents, such as a partner or children with disabilities, whole life insurance can check off all your boxes. You’ll be able to help give your family financial stability and have the reassurance of knowing they’ll be better protected no matter what.
You may be looking for various financial vehicles that can diversify your investments. Whole life insurance can help, as its cash value component grows at a set rate. This means you can enjoy guaranteed returns that aren’t subject to market fluctuations.
Whole life can help you leave a lasting legacy. The death benefit payout can help cover your child’s college education, help a family member buy a house, or help with any other expenses that can financially support your loved ones. Or, if you designate a charity as your beneficiary, the payout can help a cause you believe in.
Any increase in the cash value of a whole life policy is not subject to income tax while the cash remains in the policy.
The amount of whole life insurance you need depends on your particular situation. However, considering factors like the financial obligations you’d like to cover, your budget, and personal preferences can help you make an informed decision. A good rule of thumb is to apply for coverage worth at ten times your annual salary.3 You can always consult a financial advisor to steer you in the right direction.
Whole life insurance can work well for many types of customers, such as those with lifelong dependents or those looking to diversify their investments. Aflac offers whole life insurance with more flexibility and consistent premiums. Coverage will last your entire life, and you’ll be able to access the cash value account while you’re still alive. Get a quote today!
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1 U.S. News - Term vs. Whole Life Insurance. Updated February 1, 2023. https://www.usnews.com/insurance/life-insurance/term-vs-whole. Accessed April 10, 2023.
2 Forbes - What Is Whole Life Insurance? (& How Does it Work?) Updated March 29, 2023. https://www.forbes.com/advisor/life-insurance/whole-life-insurance/. Accessed April 10, 2023.
3 CNN – How Much Life Insurance Do You Need? Updated March 1, 2023. https://www.cnn.com/cnn-underscored/money/how-much-life-insurance-do-i-need. Accessed April 14, 2023.
Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. B61000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Virginia, Policies ICC0965JTO & ICC0965JWO. B60000 series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series: Whole: In Arkansas, Policy Q60100CAR. In Delaware, Policy Q60200M. In Idaho Policy Q60100CID. In Oklahoma, Policy Q60100COK. In Oregon, Policy Q60100COR. In Texas, Policy Q60100CTX. Q60000 series: Term: In Delaware, Policies Q60200C. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.
Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. The life insurance policy described herein contains an optional Accelerated Death Benefits Rider that is intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code. Aflac does not give legal or tax advice. Please consult with a qualified legal, tax, and accounting advisor before engaging in any transaction. In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).
This is a brief product overview only. Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent.
Aflac does not offer Universal or Variable Universal life insurance.
The content herein is provided for general informational purposes and is not provided as tax, legal, health or financial advice for any person or for any specific situation. Employers, employees and other individuals should contact their own advisers about their situations.
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