Whole life insurance is a powerful financial tool for you and your family. Here are five reasons why you may want to add whole life insurance to your financial portfolio.
1.Whole life insurance can protect your family
Whole life insurance offers death benefit protection that can keep your family financially secure in case you pass away. And because you are fully protected with your first payment, it can also be a good way to leverage your money.
2. Whole life insurance allows you to pursue cash value growth that is not subject to market risk
Whole life insurance has guaranteed cash value growth1 that builds at a steady, dependable pace. That allows it to complement fixed-income investments in your portfolio. New York Life offers the ability to customize your policy by setting a premium-paying period to pay up your policy faster and accelerate cash value growth.
3. Set up a replacement for your human capital with whole life insurance
Your portfolio growth is highly dependent on future contributions. Whole life insurance is a fail-proof way to arrange for the replacement of your "human capital" if you’re no longer around to provide for your family. Your human capital consists of the wages, benefits, Social Security, and any other unrealized forms of compensation that you would customarily expect to receive in the future.
4. Whole life insurance is a good solution for retirement and for safeguarding your assets
Whole life policies are guaranteed to build cash value over time, and this cash value can help you pay for big-ticket items like a new home or launching a business. Upon retirement, when your life insurance needs decrease, you can use that money to supplement your income during down markets. Instead of selling off portions of your portfolio when prices are depressed, you can use your policy's cash value while the market is down, giving your other assets time to recover.2
5. Whole life insurance is great for 'reinvesting' your dividends
One of the benefits of purchasing whole life coverage from a mutual company is that you will be eligible to receive dividends,3 if declared. Many policy owners use their dividends to purchase additional coverage (through paid-up additions), which provides more death benefit protection, more cash value accumulation, and more dividend-earning potential. If you prefer, however, you can simply take your dividends in cash or use them to pay future premiums.
Frequently asked questions
New York Life Insurance Company is the issuer of New York Life Whole Life. In Oregon, the Whole Life policy form number is ICC18217-50P (4/18). SMRU #5013801
1The premium quoted is for a 35-year-old male, rated select-preferred, paying monthly recurring premiums on a Whole Life (AD 117) policy with a $250,000 face amount and no riders. Your premiums may differ. Other rate classes are available. Life insurance applications are subject to underwriting. Premiums are guaranteed for the life of the policy
2Guarantees are based upon the claims paying ability of the issuer.
3Accessing cash value will reduce death benefit and available cash surrender value.
4Guarantees are based upon the claims paying ability of the issuer.
FAQs
For people with long-term financial goals that include providing a death benefit for their beneficiaries, whole life insurance is worth considering. While premiums may be higher than term life insurance, the lifelong coverage provides the necessary coverage along with the potential for cash value growth.
What are the arguments for whole life insurance? ›
While the premium is more expensive than for term life insurance, the list of whole life insurance advantages is significant:
- Your whole life premium stays the same for life. ...
- You build cash value at a guaranteed rate. ...
- Your death benefit is guaranteed. ...
- You may receive dividends.
For people with long-term financial goals that include providing a death benefit for their beneficiaries, whole life insurance is worth considering. While premiums may be higher than term life insurance, the lifelong coverage provides the necessary coverage along with the potential for cash value growth.
What is a major benefit of a whole life insurance policy? ›
Whole life insurance is designed to last your entire life. It will never expire as long as you continue to pay premiums, which will never change. In addition to a guaranteed death benefit for your beneficiaries, it can allow you to build cash value, which accrues interest over time.
What should you consider with life insurance? ›
Here is a list of costs to consider when you're deciding how much life insurance you need.
- Bill payments.
- College tuition costs.
- Costs of raising children.
- Debt payoff balances.
- End-of-life costs.
- Living expenses for dependents.
Whole life policies are guaranteed to build cash value over time, and this cash value can help you pay for big-ticket items like a new home or launching a business. Upon retirement, when your life insurance needs decrease, you can use that money to supplement your income during down markets.
How to take advantage of whole life insurance? ›
The most straightforward way to leverage your whole life insurance policy is to tap into the cash value to pay for major expenses, like college, a down payment on a house, an emergency fund or retirement income.
What is the downside of whole life insurance? ›
A more complex product than term life insurance. Higher premiums than term life insurance. Could be costly if coverage lapses early.
When should you switch from term to whole life insurance? ›
However, if you have a serious health condition that would make a new life insurance policy difficult or nearly impossible to get, converting your term life policy to whole life just might be your best bet.
When should you cash out a whole life insurance policy? ›
"Since a withdrawal generally reduces the policy's death benefit, a person who wants to maximize that payment should not withdraw cash value." Ultimately, deciding whether to draw cash from a life insurance policy comes down to personal need.
Yes. A whole life policy has cash value that grows over time. You can cash it out to help pay for retirement, or borrow against it at any time, for any reason.
Why choose whole life insurance over term life insurance? ›
The most significant difference between the two types of policies is that while both pay a death benefit to your beneficiaries, term life only covers you for a set period, while whole life offers permanent (lifelong) coverage as long as premiums are paid.
How long does it take for whole life insurance to build cash value? ›
Whole life insurance policies start building cash value from the time you begin paying premiums, but significant accumulation usually takes several years. In the early years, a larger portion of your premiums goes towards the insurance cost and associated fees.
What Suze Orman says about life insurance? ›
Suze Orman recommends that generally most people should get a 20 year term life insurance policy at 20 times your annual income. What does that mean? That means if you're 30 years old and you make $50,000 a year you should get a million dollar 20 year term life insurance policy.
How much whole life insurance do I need? ›
Most insurance companies say a reasonable amount for life insurance is at least 10 times the amount of annual salary. If you multiply an annual salary of $50,000 by 10, for instance, you'd opt for $500,000 in coverage. Some recommend adding an additional $100,000 in coverage per child above the 10x amount.
What not to say when applying for life insurance? ›
For example, applicants might lie about their age, income, weight, medical conditions, family medical history or occupation. It's also relatively common for applicants to lie about their alcohol or drug use.
What is the biggest risk for whole life insurance? ›
One of the most notable risks of Whole Life Insurance is its cost. The premiums associated with whole-life policies tend to be significantly higher compared to those of Term Life Insurance. The reason behind this lies in the policy's structure, which combines a death benefit with savings or cash value accumulation.
Is whole life ever a good idea? ›
That's why the best financial planning includes a range of financial options that reinforce each other. Whole life insurance isn't an investment, but the long-term value it provides can help you feel more confident about your money over time. That's the value it adds to your financial plan.
What is the average return on whole life insurance? ›
The average annual rate of return on the cash value for whole life insurance is 1% to 3.5%, according to Quotacy. While whole life insurance offers fixed, guaranteed returns on your cash value, you may earn higher returns with other investments, such as stocks, bonds and real estate.
