It’s the elephant in the room. Fact is, no one ever wants to talk about life insurance coverage. It’s uncomfortable, complex and can seem just plain icky. And if you ever do enter a conversation about life insurance it’s full of buzzwords you may not exactly understand.
Truth is, maybe we should all be talking about life insurance a bit more. It’s one of the important building blocks to securing a strong financial future for your family. Once you put a plan in place, it will make you feel better prepared for whatever life might throw at you.
While there are several types of insurance for you to consider, one great option is whole life insurance. So, let’s not be shy about it! This article details everything you need to know to start the process so you can plan today for a brighter future for your family tomorrow.
See our glossary of life insurance terms and definitions.
It’s there whenever you need it
Whole life insurance is a type of insurance called “permanent.” This means your coverage doesn’t end at the end of a term. Instead, the insurance is there to cover you whenever you need it, as long as you keep paying the premiums. Because the insurance is intended to cover a longer stretch of your life, premiums tend to be higher when compared to term life insurance.
Let’s help you answer the question — “Is whole life insurance worth it?”
4 benefits of whole life insurance
- It offers your family permanent protection.
Of course no one can control what happens in life, but with whole life insurance you can trust your family will be covered. That helps to give you confidence and peace of mind. - Your plan may grow in cash value over time.
With a whole life plan, you may accrue cash for as long as you own the plan and make the premium payments. Your payments today may help you down the road, and you may be able to take loans against the cash value. Note: This will create a lien against the death benefit and may result in a taxable situation. - There are also several policy riders you can use to customize your plan for the future.
A policy can carry optional riders (potentially at additional cost) that help customize it for your family’s unique situation. A representative can explain the options. Examples include options to cover your premiums if you were to become disabled, to buy paid-up insurance, or even to buy additional coverage at preselected ages in the future, without providing any medical or health information. - You can offset your tax burden and leave a legacy for your family.
No one likes to think about death or taxes. But it’s important to set your family up for every advantage they can get. Whole life is a great way to making sure your family is taken care of when you are gone and help pay taxes down the road.
Download our handy life insurance guide to the application process.
When should I buy whole life insurance?
Whatever type of life insurance you choose, the sooner you purchase it the better. There are important benefits to starting at a younger age. One reason not to wait is the premium payments are usually lower for younger people, and they increase as you age. Locking in lower premium payments now is a smart move for the future.
Another benefit is the life insurance medical exam is often easier to pass when you’re young and healthy, before health concerns may arise. This is especially important if there’s a history of medical conditions in your family.
However, the most important thing that drives the timing of a life insurance purchase are those life-changing events like expanding your family or changing jobs. These moments might cause you to get your first policy or to reevaluate how much life insurance coverage you already have.
Life changing events: Insurance that has you covered.
How much whole life insurance do I need?
When it comes to figuring out how much life insurance you need, people tend to think about the amount they would need to pay off a big debt like a mortgage or funeral expenses, but there’s more to it than that. To calculate the amount of life insurance you need, consider what it would cost to cover all of your household expenses. Here are some examples.
What can whole life insurance be used for?
- Paying bills like groceries or utilities.
- The cost of raising children.
- Childcare, so the surviving spouse can work.
- Your child’s college education.
- Your child’s future wedding.
- Paying off credit cards.
- Paying other smaller debts that could add up.
- Paying for medical bills and funeral expenses.
Every family is unique, and their needs are different. That’s why it’s a good idea to talk with a professional who can guide your decision and help you create a plan that works best for you.
Alternatives to whole life insurance
With all the different options, you may be wondering, “What life insurance is the best for me?” Well, besides whole life insurance, there is another type of permanent life insurance that stays with you for your whole lifetime as long as you pay the premiums. It's called universal life insurance, and it comes with its own benefits, like the flexibility to adjust the timing and amount of your premiums and adjust the death benefit (within certain limits) as your needs change, all within one plan of insurance. Note: Universal life plans provide life insurance coverage provided sufficient premiums are paid. The duration of coverage will depend upon the amount, timing, and frequency of premium payments, interest credited, monthly deductions, and any loans or withdrawals. The premiums paid may need to be increased to keep these certificates in force.
There are also term life insurance policies, which offer coverage for a set period of 10, 15, 20 or 30 years, with a more affordable premium. This is a great first step since these types of policies often include the option to convert to a different plan as your needs change.
In level term plans, the sum set in place at the beginning stays the same throughout the plan. There are plans where the sum increases or decreases at predetermined stages in time. There are even return of premium riders you may be able to add (at additional cost) to your plan to get back all the premiums you paid at the end of the term.
What is term life insurance and how does it work?
What if I’m still on the fence …
If you’re still wondering, “Do I need life insurance?” The resounding answer is “Yes!” There’s no way of knowing what tomorrow will bring. We need to be prepared. One of the best ways to protect your family from unforeseen events is with life insurance. It’s a smart way to ensure a bright future for your children, one filled with every opportunity.
Reach out to a representative from Modern Woodmen of America who can help you learn more about your options and what might be right for your own family’s situation.