Term insurance can protect one’s loved ones in case of the insured’s demise. But whole life insurance policies cover the policyholder’s life and are the best way to get money back even during the insured’s survival. A whole life insurance plan comes with a premium-return benefit and helps build cash value. It is permanent life insurance, wherein one does not have to worry about the coverage expiring as long as premiums are paid on time.

Top reasons whole life insurance is the right choice

Protects the insured’s family
Like traditional life insurance policies, whole life insurance provides death benefit protection. So, it will keep the insured’s family secure even in case of the insured’s demise. Since whole life insurance fully protects one with their first premium payment, it can be an excellent medium to leverage one’s money.

Returns premiums paid on survival
In term life insurance, the policyholder bears the cost of offering a secure financial future to their family. But, if the insured survives after the policy term expires, the premium becomes a sunk cost. While the premium amount one bears is nominal, it’s better to recover all the money paid upon surviving the policy term. So, if that’s what one seeks, whole life insurance is the right choice for them.

Offers tax-advantaged growth
Beyond the tax-free sum, one can leave for their loved ones the cash value increment on a tax-deferred basis. So, one can take a loan against the value and pay the money back as per the term, or the amount gets deducted from the money one leaves for their loved ones. It is easier to assess this tax-free asset compared to other assets one keeps for their heirs. While the taxes may impact assets like a property or other aspects of the estate, such is not the case with whole life insurance. Further, this money can save one’s loved ones from having to pay for the funeral expenses.

Life insurance is continued post-retirement
There may be situations wherein one takes a loan that continues beyond retirement. But, one may not want their dependents to go without a life cover. In this case, one may want a whole life insurance plan that continues beyond retirement. Some top companies offering whole life plans let one do so with a requirement for premium payment only until 60 years. It gives one peace of mind that even after one retires, their loved ones will be financially safe.

Cash value growth is not subject to market risk
The whole life insurance ensures guaranteed cash value growth. It builds at a dependable, steady pace. So, it easily complements the fixed-income investments in one’s portfolio. Many insurance companies let one tailor the policy by setting the premium-paying period to accelerate cash value growth by paying for the policy faster.

Suitable for those who wish to donate money
One can use the whole insurance policy payouts in several ways to support their desired causes. Charity and donations also offer tax benefits. So, if one has had a high income in a year, they can get an income tax deduction by financially supporting a charitable donation. Besides, one can choose to offer the accumulated money to the non-profit account in the future. But, tax laws evolve continually, so, it’s best to consult a tax advisor to reap maximum benefits.

Offers lifetime critical illness coverage
Many whole life insurance plans offer coverage to policyholders upon diagnosis of a terminal illness until the age of 99. It is an extra benefit with the life cover. So, the insured and their family will not have to bear the burden of treatment costs even if the insured contracts a terminal illness post-retirement. This is one of the biggest reasons whole life insurance is the right choice as this benefit often doesn’t come with other policies.

Has a dividend-payout option
If one buys a whole life coverage from a mutual company, one can receive dividends on the amount, provided it is declared. Several policyowners employ the dividends to buy additional coverage via paid-up additions. It offers more cash value accumulation, death benefit protection, and dividend-earning potential. Alternatively, one can take out the dividends in cash and use them to bear future premiums.

Acts as a cushioning to safeguard assets
Whole life insurance builds cash value over time. The payouts received from a whole life insurance policy can enable one to bear costs for big-ticket items, such as launching a business or buying a new home. Further, as one retires, one’s life insurance needs may decline. So, one can use the money to supplement their income during dull markets. The policy’s cash value can be used without selling a portion of one’s portfolio during bear markets. This gives one’s other assets time to recover.

Whole life insurance plans are long-term life insurance policies wherein one can enjoy substantial life cover during the earning years and after retirement. Such a policy can act as a emergency backup for the insured as well as their loved ones.