Life Insurance Made Simple

Photo credits to financialplanningph.com

Before deciding to get whole life insurance, or permanent life insurance, it is always wise to know the good and bad side of it. Even knowing just one advantage and disadvantage of this kind of insurance policy will be helpful in deciding whether you should proceed to getting one.

First, a permanent life insurance policy will definitely have higher premiums as compared to non-permanent policies. This is because the money that you will be paying as premiums goes into a kind of “savings” program. In other words, the length of time that the policyholder pays his insurance premiums is proportional to how large a sum he has saved in his permanent life policy.

Another fact about permanent life insurance policies is that it has fixed policies. For instance, the premiums are fixed at a set amount for the whole duration of the life of the policy. This means that whether there are economic troubles or not, whether there is an increase in mortality or not, the premium that will be paid by the policyholder remains the same. Another aspect that is fixed in permanent life insurance is the death benefit. Knowing this, it would be wise to consider carefully how big a death benefit you want in the permanent life insurance policy.

Whole life insurance policies also allow you, to earn interest that is tax-deferred, and you have the ability to borrow against it. These earnings come from the total amount of money that you have invested in the life policy. However, it sometimes takes decades for the full benefit of this feature to show. This is why some people say a permanent life insurance is not a very good way to make short-term investments.