Understanding Whole Life Insurance
There are two primary ways we can financially protect our families. The first way is through savings and investment. This can be facilitated through an employer sponsored 401K account or by securing some kind of savings/investment options as an individual. The other way to financially protect our families is through the purchase of a life insurance policy.
Life insurance is a particularly import product when a family relies heavily on one individual for financial support. There’s an inherent risk a family takes when the breadwinner’s earnings are unprotected by other resources. A substantial insurance policy would be a great way to protect the family upon the untimely death of the breadwinner. At the least, an insurance benefit will give the family an opportunity to adjust the family’s financial structure without suffering financial stress.
There’s two primary types of life policies, term life and whole life. A term life policy requires the policyholder to pay a premium for a set period of time for a specific death benefit. Payment terms are usually 20-25 years after which time the policy is considered paid-in-full while the benefit remains intact until the policyholder’s death.
Whole life is an entirely different animal, which we will discuss below.