When I tell people that I sell whole life insurance, they're often surprised. They either don't know the benefits of whole life insurance over term insurance, or they don't know how much more they could be doing with what they've got.
And while I often like to wrap my message in something more spiritual, today, I thought it would be best to share some of the most profound benefits of life insurance that I know.
10 Unique Traits of Whole Life Insurance
So what's so special about whole life that I just can't wait to share it with the world each day? Let's unpack some of the important pieces (though there are many more than ten).
1. It's a Private Contract
One of my favorite things about whole life insurance is the privacy afforded to you and all other policyholders. No one outside of the insurance company has a right to see or access your policy information. This includes the IRS, creditors, and other institutions who might want a peek at what you've got. Whatever's in your policy is between you and your carrier, and it's as simple and powerful as that.
2. Policies Are Unique
When you want a life insurance policy, I work with you to make it as unique as you are. It's completely customizable based on factors such as:
How much you want to contribute each month/year
The amount of Death Benefit you want
Whether you want more early Cash Value or more Death Benefit
Additional protective riders for things like Long Term Care, Disability Income, and more
How long you want to pay your premiums
And much more.
Whole life insurance can be whatever you make it, you can even have different policies for different financial goals. The point is that it's a great multi-purpose tool to build your financial foundation upon.
3. You Can Store Cash
When you have a whole life insurance policy, you have access to what's called a Cash Value account. Every premium you pay contributes to your cash value growth, so it's like a savings vehicle in that way.
It's a particularly great place to store your capital because it's guaranteed not to decrease. Once your cash value increases, it's locked in permanently. On top of that, you receive guaranteed interest and non-guaranteed (but highly probable) dividends each year. It's more stable than putting cash in the bank, and you're going to get a better savings rate, too.
4. Uninterrupted Compounding
On top of being a safe place to store cash, you can anticipate uninterrupted compound growth over the lifetime of your policy. It's uninterrupted because even if you access your cash value, you do so through a policy loan. This is money the insurance company lends to you, which means that whatever is in your account stays earning interest and dividends at the full value.
This occurs over the course of your life, right up until your Death Benefit is paid to beneficiaries (income tax free). Many people enjoy growth well beyond what they pay into their policies via premium.
5. Even the Non-Guarantees are Strong
Even though dividends, which are a portion of the company's profits, are not-guaranteed they are reliable. That's because as a policyholder with a mutual company, you're also a partial owner of the company. And if there are any profits for the year, they must be distributed to policyholders. Fortunately, insurance companies are good at what they do, and most companies have made a profit every year over the last 200 years.
Plus, once a dividend is paid, it's yours. The floor of your policy won't decrease. You can count on your cash value.
6. You're in Control
When you put your money in the bank, you don't have as much control as you think. And when you put it into a 401k or equities, you definitely don't have as much control as you think. Yet by having a whole life insurance policy, you're in the driver's seat. You make all the calls, and you don't get penalized for accessing your cash.
This is useful, too, when you want to accommodate changes in your life. You can take money at any time for any reason, and you can make changes if you buy the appropriate riders. Can't pay premiums for a short while? You have options. Want to draw a temporary income? You have options.
7. We Insure What's Important
Everything of value gets insured. Our homes, cars, our valuables, and even our pets. Life is important too, and it's worth insuring. If you were to die tomorrow, would there be someone or something you leave behind that was benefitting from your life? Most times, this is a spouse or children, though many families expand beyond that.
Life insurance protects the people you love from the sudden loss of you. And while you cannot be replaced, the insurance can help your loved ones move through a difficult time a bit easier.
And the harsh truth—many people are underinsured. Do you know your full Human Life Value?
8. It Raises Your Estate
The moment you buy a policy and it goes into effect, it's added to your estate. A $500 monthly premium might buy you a $250,000 Death Benefit. Your estate immediately increases by that amount. And over your lifetime, your Death Benefit can rise (if you add Paid-Up Additions to your policy), increasing your estate alongside it.
9. Death Benefits are Income Tax Free
When your policy pays out, it passes to your heirs free of income tax. This means that your heirs/beneficiaries can receive life-changing money without the government getting a slice. The Death Benefit is also protected from estate taxes, unless it causes your estate to exceed the estate tax threshold. This means that you don't have to worry about leaving money to your loved ones that does more harm than good.
10. Waiver of Premium
Life doesn't always go as planned. By adding a waiver of premium rider, you can keep your life insurance policy even if you become ill or injured and can't pay premiums for an extended time.
Bonus Content:
The Mechanics of Policy Loans by Bob Murphy, PHD Economist and NNI (Nelson Nash Institute) board member
The Whole Truth About Your 401k Plan by Todd Langford, Truth Concepts (Password: Wh0leTruth!)