What are the benefits of whole life insurance? And how do they compare to those of term life insurance? If you’ve been wondering about this yourself, prepare to have your questions answered.

Below is a comprehensive guide on why whole life insurance is a good idea for everyone. For starters, it’s the most secure way to make sure your loved ones are taken care of after you pass.

And even before you’re gone, you yourself can reap its benefits. These include possible dividends, tax reductions, and retirement funding.

Ready to learn all about it? Read on to discover even more about the amazing benefits of whole life insurance.

What Is Whole Life Insurance vs Term Life Insurance?

The term whole life insurance means that the policy lasts until the policyholder dies. No matter how many years there are until that day, the policy won’t expire. The only way the policy can be canceled is if the insured fails to pay their premiums or if they voluntarily cancel it.

Alternatively, term life insurance policies do expire. They last only until their specific term is up. After that, they’re either renewed or they end.

However, the terms and conditions of the policy, including premiums, can change with each renewal. Usually, this means that the premiums increase.

Now, let’s take a look at the specific advantages of whole life insurance.

1. Whole Life Insurance Never Expires

We mentioned this one already, but the really important part is that you’ll never be without coverage.

For instance, when term life insurance is about to expire, you must consider your insurance options all over again. Your renewal offer might now be more than you can afford or otherwise unsatisfactory. If so, you’ll have to compare quotes from other companies.

This could plausibly take so long that your current term expires. Then, you (and your surviving loved ones) are left without coverage if anything happens to you.

This may be a rare, worst-case scenario, but it’s still possible.

2. The Cost of Premiums Doesn’t Change

As mentioned, your renewal offer premiums for your term life insurance will increase as you get older. And even if you shop around for the best deal, premiums for the elderly are always expensive.

This is arguably the number one advantage of whole life insurance. Your premiums will never, ever go up. If you start paying whole life insurance premiums in your twenties, you’ll pay the same for premiums when you’re 75.

For this reason, whole life insurance is much more affordable overall. Even better, it’s more affordable when you need it the most—that is, in your old age.

3. There’s Less Hassle

You can tell by the examples above that term life insurance is a big hassle every time you have to renew. That’s not the case with whole life insurance.

Since your whole life policy never changes and you never have to renew it, you don’t have to worry about it, either. All you must do is make sure you keep paying your premiums.

4. Know That Your Loved Ones Are Taken Care Of

All the terms and conditions of your whole life policy, including what you leave to your loved ones, never change unless you decide so. And they never expire or lapse as long as you pay your premiums. Thus, you can rest knowing your surviving family members are well taken care of on the day of your passing.

5. Tax-Free Benefits

Amazingly, the money left to your loved ones through your whole life policy is completely tax-free. Your survivors will get exactly the amount that you set aside for them. Conversely, the taxation of term life insurance benefits can be an enormous problem for your surviving family.

6. Possible Dividends

Some insurance companies also award you with annual dividend payments. You can use these to invest more in your policy or for personal use.

7. Your Policy Has Cash Value

Now, let’s talk about how the insured can benefit now, before they pass. The following benefits all have to do with the fact that your whole life policy builds cash value as you add to it. This is not true of term life insurance.

Take Out a Loan

Once the cash value is built up enough, you can borrow some for use at any time, for any reason. It’s an easy loan to get approved for too because you’re borrowing from yourself. Expect a very favorable interest rate as well.

Tax Benefits

Your cash value is also tax-deferred. That means, as long as it remains in your whole life insurance account, it’s tax-free. You will only pay tax on it if you cancel the policy and take the cash for yourself.

Also, your whole life policy may be subject to taxation if it becomes a Modified Endowment Contract (MEC). This can happen if you put excessive amounts of money into it. Here, the policy is recategorised as an MEC and is subject to different taxation laws.

Donate to Charity

Sometimes, you can get an income tax reduction when you donate large sums to certain charities. You can borrow from your whole life policy for this too.

This may be a good idea during years that you make a lot of income. You get to save on taxes and help out at the same time.

Fund Your Retirement

Your whole life insurance cash value is also good for retirement funding. Take out consistent, reliable payouts as an annuity alongside your other retirement income.

Reap These Benefits of Whole Life Insurance

If you don’t have whole life insurance, you now know why you should. Don’t miss out on these benefits any longer. Contact Central Jersey Insurance Associates today to discuss your options.