You’re shopping around for whole life insurance, but which policy is the best one for you? You will find that there are a lot of companies out there, like Aflac, which offers life insurance policies for individuals and families. It is important to note, though, that Aflac is not health insurance – they only offer supplemental health coverage, so if you need a health policy, you’ll have to get it from somewhere else.
The whole life insurance you purchase is a good one if it has the following qualities:
- It offers coverage for your entire life
- The payments don’t fluctuate – known as a level premium
- The return on cash value that accumulates should be guaranteed
These are concerns that should be addressed before you decide to purchase any policy. It’s a good idea to speak with a financial advisor to ensure you can afford whole life insurance and that it’s a good investment for your situation. Avoid going to an advisor that makes a commission on sales, and instead, choose one that is fee-only.
Choosing the Coverage
The first thing you have to do is determine the type of coverage you need. You won’t find many companies that offer small amounts for whole life insurance, so if you’re looking for $10,000 to cover funeral costs, then you should opt for term life insurance. You’ll have to shop around to get the coverage you and your family need.
Determining How Much Coverage to Buy
If you were to pass away, how much would your family need to survive? If you’re the main breadwinner, then you should buy a policy that is eight to 10 times your annual income. You should also add in any debts you currently owe for houses, buildings, vehicles, loans, and credit cards.
Different Approval Processes
Not all approval processes are the same. Some insurers will ask questions about your health, but won’t require a medical exam. Then there are others that don’t ask any health questions and promise that you’ll be approved no matter what.
If you’ve already been turned down from a standard life insurance policy because of your health issues, then you will have to find a policy elsewhere. Just be prepared for there to be a few downsides, such as higher rates or medical exams. You should also pay attention to the benefit terms – some won’t pay the full death benefit if you die within the first few years after you bought the coverage.
If you’re living with some health issues, you can usually find a good price for a fully underwritten policy, which asks questions about your health and requires a medical exam.
What’s the Rate of Return on Cash Value?
There’s a cash value savings account offered through most whole life insurance policies. A percentage of your premium is placed into this account, slowly growing it. It is tax-deferred and can be used to purchase additional coverage or withdrawn when you surrender the policy. Just note that the death benefit will be reduced if you don’t repay it and if you surrender the policy, it will disappear.