The cost of the premiums paid to the policy will never increase. The sooner you start your whole life policy (the younger you are) the lower the cost of the premiums. Parents should consider starting while life policies for their very young children.
The reason why this is important is because with term policies, your rates will rise over time. This is due to the changes in your health and age. As you get older, your chances of dying increases. Since the life insurance company takes on that risk, they increase the cost of premiums. With whole life insurance, the premium cost will stay the same as long as the policy is in force. Even if you are gravely ill, the cost will never change. It's guaranteed.
Bonus Advantages of Whole Life Insurance: As the years go by, the policy actually gets cheaper. What's one of the eroding factors of money? Inflation. As time progresses, you are paying the premiums with inflated dollars, which means that the premiums get cheaper and cheaper. The time value of money is working for you.
The premiums paid go towards increasing the cash value and death benefit. But the key here is that they are guaranteed. Your cash value and death benefit can never decrease in value unless you start withdrawing the cash value from the policy.
Your whole life insurance policy acts as a savings account, which is one of our strategies to save money. When you pay your premium and your cash value increases, it's guaranteed. When interest is earned and added to your cash value, it's guaranteed. The same applies to your death benefit.
With a whole life insurance policy, you pay the premiums with after-tax dollars. The cash value grows without taxation. You are only taxed after your withdrawals from the policy exceed your basis (the total amount that you put into the policy).
Policy Pays a Dividend: Whole life insurance policies, also referred to as dividend paying, permanent insurance policies, pay dividends. Now, the key thing here is that these dividends aren't taxed. They are actually considered returns of premium. For example, let's say that you pay $1000 into the policy. At the end of the year, the insurance company looks at how efficient it was with your policy. Let's say they earned 10% on your policy ($100).
After deliberation, they decide to return $90 back to you (the $10 pays for administration fees and a contingency fund). This is not an actual gain. It is a return of premium, which is not considered a taxable event. This tax saving tip is widely unknown. And, a dividend paid to your policy does not lose value. It's value is guaranteed because now it's part of the cash value.
When considering your needs for insurance products for your home or business remember contacting Bennett Insurance Group is the right move. Give us a call at 623-979-4140
Presented By:
Jim Bennett
Bennett Insurance Group
623-979-4140
http://jimbennettinsurance.com
jim@jimbennettinsurance.com
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