Having a life insurance policy is one of the best ways to ensure your loved ones’ financial stability should you pass away; however, deciding whether or not to purchase whole life insurance can be a challenge. As opposed to term life insurance, which is only valid for a set number of years, whole life insurance remains in effect the entirety of your life – assuming that the premiums continue to be paid. One of the biggest benefits of whole life insurance is that a portion of your policy premium goes into a tax-deferred investment account that grows in value as you age. With a whole life insurance policy, you are allowed to borrow or even withdraw the entirety of the cash value at any given time.
Given that the interest you’ve earned is not taxed, you can accumulate a significant amount of wealth within a whole life insurance policy. For high-income earners who have already exhausted their external retirement and savings mechanisms like a 401K, IRA, Roth IRA, 529 plan, and an HSA, a whole life insurance policy makes the most sense. Keep in mind that because whole life insurance is permanent and includes an investment component, it can be significantly more expensive than a term policy. If you decide to withdraw money from your whole life insurance policy, there are a few options available. First, you can take a loan where the cash value is held as collateral. Second, you can make a partial withdrawal; however, there may be fees and a limit imposed by the insurance companies. Other options include selling the policy or surrendering the policy.
To learn more about your life insurance options and for help in picking the best policy for your needs, give the team at Planners Insurance Group in Fort Worth, TX a call to learn more.