Affordable Whole Life Insurance - You Have More Affordable Options

Affordable Whole Life Insurance - You Have More Affordable Options

  • Published: Jan 02, 2020

Looking for affordable whole life insurance? The options are many. On this page, I will give you a brief outline of some of the options available. Let us first define whole life insurance. Whole life provides a death benefit that can never decrease for the rest of your life or to age 100.

At age 100 the cash value of the policy equals the amount paid in. Some companies build the policy so that the cash value equals the amount paid by age 90. There are two types of whole life policies, participating and non-participating policies. Participating policies, usually issued by mutual life insurance companies, pay a dividend in addition to your cash value if the company performs well. Dividends are not guaranteed.

Life insurance premiums are based on the applicant's age, health and occupation or avocation. If you are in good health at the time you apply you get a lower rate than the person who is not. Keeping in mind that whole life can last up until age 100 you can appreciate that the premiums will be higher than those of a term policy that lasts for a much shorter period, 5 or 10 years for example.

Non-Participating Whole Life
I have a particular preference for non-participating whole life because the premiums are lower. Let us be practical, we buy life insurance to protect our families and a non-par policy does that as well as any.

Participating in Whole life
You pay more for a participating policy than you would for non-par insurance but the cash value break-even point is much earlier when you consider the dividend paid by the better companies. Think in terms of a break-even point about 20 years, though I have seen some policies break-even before 10 years. This is not based on projections but rather on actual experience.

Combination Policies
Some life insurance companies offer a policy I like to call a combination policy. This is a participating whole life policy with part of the death benefit initially provided by term insurance. As the years go by and the dividends are added to the policy these dividends are used to purchase paid-up additions which are tiny fully paid-up whole life policies.

As the paid-up additions grow they replace the term insurance until the term portion of the death benefit is totally replaced. Some of these combination policies or enhanced policies perform well depending on the company’s performance. These policies can even be cheaper than non-participating whole life.

As you can see there are alternatives to the basic policies. Affordable whole life insurance policies are available. When you consider that you get back your cash at some point if you don’t die whole life ends up being more cost-efficient than term. You also have your affordable whole life insurance policy for the rest of your life. The death benefit never decreases and it can never be taken away from you.