Tara,
Whole life also contains a cash value account that builds over time, slowly at first and gaining steam after several years. You can withdraw your cash value or take out a loan against it, but remember, if you die before you pay back the loan, the death benefit paid to your beneficiaries will be reduced. For example:
Susan has a $500,000 whole life policy in force and, over the years, has
borrowed continually from the cash value. Her total loan amount and accrued interest totals $300,000. When Susan dies, her beneficiary will receive $200,000 because the life insurance company will first pay itself back from the death benefit.
Understand what your beneficiaries will receive upon your death. If you have a traditional whole life policy, your beneficiaries receive only the death benefit no matter how much cash value you’ve built up.
Great Question.
Archive for September, 2008
What kind of Life Insurance Policy Do I Need And How Much Will It Cost?
Frank
Frank.
There are many types of life insurance policies depending on your goals, and there are huge price differences among different companies offering identical coverage. Policies are available from hundreds of life insurance companies in the United States. Most financial planners recommend that each family income provider carry no less than 10 times their annual income in life insurance.
Americans purchased $3.0 trillion of new life insurance coverage in 2006. By the end of 2006, total life insurance coverage in the United States reached $19.1 trillion.
Of new individual life policies purchased in 2006, 41 percent, or 4 million,were term insurance. The average new individual life policy was $167,000 in 2006. The most common supplementary benefit is waiver of premium. Of individual life policies in force in 2006, 89 percent, or 40 million, allowed the premium to be waived during disability.
Great Question.
Does my health affect my Life Insurance Policy?
Debbie
Debbie,
Something important to understand about term life insurance rates is that they’re easily affected by multiple lifestyle habits that affect your health. One of the major things that insurance companies look for is the health of the individual. Depending on your health, and the things you do that affect your body, your rates may go up or down. Companies focus on health for good reason. They want their customers living long, prosperous lives. This benefits both parties. For the insured, the longer that you stay insured, the longer you can be protected by your policy. For the insurer, the longer the insured pays for insurance, the more money the company accumulates. With that being said, it becomes more obvious as to why health plays a part in insurance rates.
Interesting Question.