Is Whole Life More Expensive Than Other Policies?
Some tend to steer away from whole life insurance because they feel it is so expensive. Instead, individuals who should probably give permanent life insurance a chance turn to the more affordable term life insurance. However, they tend to outlive the term and, upon renewal, are older and pay a higher premium. During that time, the individual could have had a whole life insurance policy that gains cash value. Nevertheless, it is up to personal preference, budget, and life situation as to which is purchased.
As for what whole life offers, it offers the same rate throughout a person's entire life. It does not go up and the death benefit does not change despite any changes in a person's health. This is great because your health can rapidly change, yet your life insurance will not.
Is it more Expensive?
Whole life insurance has a tendency to be more expensive than term life insurance in that it is permanent and consists of a number of benefits that term does not have. However, it may not be the most expensive form of life insurance that you can invest in.
Universal life insurance may have the higher premium because it allows for a variable premium, which means the premium changes. Whole life insurance has a fixed premium. But if you do come upon hard times and can't pay your premium, you may have some options available to you. One of those options is that whole life insurance gains cash value.
One of the reasons why you pay more for whole life insurance is due to the fact that the policy gains cash value. When you pay your premium, a portion of your premium is invested. You cannot choose your investments because the insurance company has already done this for you. Rest assured, however, that they have chose good investments because they want the investments the company makes to gain value. The reputation of the company depends on this, partly.
But over time, the policy gains cash value and you can use that cash value in a number of ways. You can borrow from it if you come across hard times or you can use the money toward your premium if something happens you can't pay it. Your money works for you.
If you borrow against it, you do have to pay the money back and you may have to pay it back with interest. Although this ability exists for you, you do not want to do it too often. When you pass away, this cash value is passed on to your beneficiaries along with the death benefit.
If something happens that you can't pay your premium, simply tell your insurance company. They will then take the desired amount and apply it toward your premium. This can help you take the time you need to get back on your feet.
What you find is that this is a very unique form of life insurance. Although it is not as cut and dry, this is good because it allows you to have options and options are good. You are also given some financial leverage when you continue timely premium payments. Everyone can use a little leverage and whole life can provide that.
So now you know why you pay more for whole life insurance. You are given a permanent insurance option that gains cash value and also pays a death benefit to your beneficiaries. But don't let this discourage you because you can still achieve an affordable rate by comparing quotes before buying.