Leaving A Legacy For Your Children
How to Use Whole Life Insurance to Leave a Legacy for Your Children
In the past, many parents would build work their whole lives to build up enough assets to pass on to their children and future generations. In today's environment with rising costs, inflation, and uncertainty, leaving a legacy can be extremely difficult for the average person. Luckily there is another way to leave an estate for future generations without having to spend considerable amounts of time or money to do it, and that is with Whole Life Insurance.
What Is Whole Life Insurance?
Whole life insurance is a permanent policy that provides guaranteed protection for your loved ones for the rest of your life. Unlike term life insurance, you accumulate guaranteed cash value with whole life insurance, which you can utilize anyway you see fit. Participating whole life insurance is eligible to earn dividends which may be utilized to boost the policy's death benefit and cash value. There are also other options, such as utilizing profits to assist pay premiums.
Benefits of Whole Life Insurance vs. Term Life Insurance
When it comes to life insurance, you typically have the option of selecting the policy that best suits you and your family. If you already have a term life insurance policy, you may be eligible to convert it to a whole life coverage.
6 Benefits of Whole Life Insurance
Whole life insurance, often known as permanent insurance, is long-term coverage that is intended to last a lifetime. Unlike term life insurance, which provides coverage for a certain period of time and may increase in cost over time, whole life insurance provides a death benefit to beneficiaries as long as the premium is paid. It also includes living benefits such as a cash value component.
Permanent life insurance coverage might benefit you and your family financially. Here are a few more benefits of having a whole life insurance policy:
1. Policy premiums remain constant
Your premium will not rise if you purchase a full life insurance as long as the policy stays in force. When you begin to consider retirement planning, you'll find peace of mind having a fixed-price for a whole life policy or one that may be entirely paid for before you reach your golden years.
2. Accumulates cash value
A whole life policy also includes a feature that allows you to accumulate cash value that you may borrow against in the form of a loan.* You could use these funds to pay for emergencies, supplement your retirement, and many other benefits.
3. May offer potential dividends
Although not guaranteed, a whole life insurance may also pay dividends on the cash value that builds up within the policy. These dividends may be used in the following ways:
- Reduce the amount of premiums due on your policy
- Provide "paid-up additions" (think of it as buying little amounts of extra coverage) to your life insurance coverage amount.
- Accumulate interest from the dividends making the cash value grow faster.
- Spend any way you wish, as they can be paid out to you in cash.
4. Tax-deferred growth
With a whole life policy in place, the cash value that accumulates over the life of the policy is tax-deferred.
5. Policy remains in-force regardless of changes in health status
Whole life insurance will not be terminated if your health declines, giving you true peace of mind in knowing you've helped preserve your beneficiary's financial future.
6. Lifelong coverage
Unlike term life insurance, whole life plans are normally in force for the duration of the insured's life, as long as the policy's premium is paid.
*Any loans taken from your life insurance policy will accrue interest. Any outstanding loan balance (loan plus interest) will be deducted from the death benefit at the time of claim or from the cash value at the time of surrender. If the loan balance grows too large for the cash value to support it, the policy could terminate.
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