Wherever there is public opinion, the potential for misconstrued truths and even myths are probable. Whole Life Insurance is no exception. There are many misunderstandings in regards to the way Whole Life Insurance works and its benefits.
Some misconceptions are the result of individual opinion, however, there are quite a few “myths” floating throughout the internet where life insurance is concerned. To put some misunderstandings to rest, here are 5 common myths we’d like to address.
Myth # 1: All Life Insurance is created equal
They are absolutely not. Because Life Insurance is not created equal, you won’t be able to simply choose a basic policy out of a list of carriers.
For example, there is a significant difference between term life insurance and whole life insurance.
|Term Life Insurance||Permanent (Whole) Life Insurance|
|Designed for short-term needs||Designed for long-term needs (lifelong)|
|Payments are toward death benefits only||Has cash value accumulation|
|Costs increase at each renewal point||Premiums remain level, regardless of age and for the life of the policy|
|Premiums are usually guaranteed (for the initial term)||Premiums are guaranteed (for the life of the policy)|
|No living benefits||Living benefits|
There are different types of Life Insurance available in order to accommodate the different life needs that individuals will have.
Individuals who are in good health and looking to financially plan for their future via death benefit as well as financial solidarity in their retirement, are more apt to consider a Permanent (Whole) Life Insurance policy over a Term Life Insurance policy.
It becomes important to fully research all potential policies and options involved in order to know what you can afford and what policy type best suits you, your life, and your life goals.
Myth #2: Your Life Insurance benefits are only available when you die
This particular ‘myth’ is more akin to confusion over what the most well-known types of life insurance (term and whole) provide. It is with a Whole life policy that you enjoy significant living benefits and for the lifetime of coverage. For example, policy owners generally receive annual dividends after the first year of the policy (though not guaranteed).
With permanent (also referred to as Whole Life) life insurance, the living benefits continue in terms of your dependents as well.
In similar fashion, you can access the cash value of the policy during your life for financial needs your dependents may have while you are still living.
Money towards your child’s education for example. Debt consolidation is another potential use for the available cash value that you can pull from your Whole life policy. The cash value benefit enables you to enjoy financial freedom with your dependents while you are still living.
Myth #3: I’m Young; I can wait to get insurance
Insurance is a commodity that we must have before we need it. Life Insurance is no exception. Therefore the best time to purchase life insurance is when you are young and healthy.
A key element in the process of purchasing whole life insurance involves medical check-ups. The younger and healthier you are will optimize the benefits of your policy.
You may not have dependents now, and even if you never do, there is always the potential that at some point in your life there will be someone that could use the financial assistance that a whole life policy provides.
Myth #4: Whole Life is too expensive
This is perhaps the biggest misconception when it comes to Whole Life insurance. The reality is, with the living benefits that are incorporated with a Whole life policy, you are able to work toward financial security with the cash value option allowed in a Whole policy. The money you pay into your premiums can be utilized while you are alive.
Whole Life policies have flexibility in how you initially structure the contract. For longer periods (such as an entire lifetime), Whole Life insurance is considerably less costly than a lifetime of hopeful attempts to save money that doesn’t accrue substantial interest, and does not provide cash value the way a Whole Life policy does.
Myth #5: I’ll save money working with several agents
Utilizing more than one agent is actually not recommended. While some may see the use of multiple agents as a good way to acquire the most competitive price, it instead tends to cause confusion and leaves the policy holder having to interpret any differences between each agent.
It is highly recommended that you work well with one dedicated agent who writes for a dozen or more companies. This eliminates the confusion and allows for one agent to review multiple companies to determine which policy (or policies) best suit your lifestyle, health, and needs.
Myths dispelled, so what’s next?
Despite what you have read here, it is always prudent to incorporate your own research when considering the purchase of something as important as Life insurance. There are many options available, and perhaps the best advice to take away with you is to find that one dedicated agent who will assist you.
At Paradigm Life we work to educate others on how to purchase Life Insurance to fit your needs as well as build your financial economy and prepare you for a successful retirement.