Modified Whole Life Insurance

A Whole Life Insurance or permanent life insurance is a life insurance policy that covers the insures whole life as long as the premiums are paid every year. There are people who continue to debate over which life insurance is best. It always boils down to what you can afford and your family’s financial needs after you are gone.

Pros

This type of insurance covers you your entire life and not just for a specified period of time which is the case with term insurance. You cannot predict the future and no one is sure when death is going to knock at your door. You need to secure your life and give your love ones financial freedom in case something happens and your caught off guard. A whole life insurance policy creates benefits and it also builds cash values that you can withdraw and borrow against. There are even choices under whole life insurance such as traditional (gives guaranteed premium rate of return on your cash value), interest-sensitive (gives a valuable rate on your cash value similar to adjustable rate mortgage) and single premium whole life insurance (great for someone who has a large sum of money who wants a policy upfront).

Cons

Despite these benefits, whole life insurance is more expensive than term life insurance. Younger individuals aren’t advised to avail of the whole life insurance as the premiums are high. For someone starting his or her career, such high cost in premiums could be a hindrance and create financial instability. Compared to other investments, the rate of return is very low. Don’t be blinded by the rate of return and miss the point that insurance prioritizes more on protection for your dependents and the cash value and tax benefits are just be a bonus.