subject: Whole Life Insurance A Good Option For Your Retirement [print this page] Whole life insurance is a sort of insurance that offers a flat premium payment for a definite period of time. This sort of plan assures you of death benefit. One of the benefits that can be obtained from this type of policy is cash surrender value, which is a cash reserve that can surely be utilized for retirement age.
The Benefits
One of the advantages that a policy holder can get from a whole life insurance is guaranteed cash values. From the time you begin paying for your plan, you are already assured of an available specific amount of cash that you can get as you retire.
Ostensible Features
Cash values being drawn from a whole life policy are commonly taken from the policy itself. But dividend-paying whole life insurance provides some inadequate withdrawal aspect in such a way that you can take out any cash values from paid insurance that was acquired with the dividends over the years of your policy. The returns from your policy can also be taken as cash prior to your retirement. Apart from the withdrawals from a dividend-paying whole life plan, you can procure policy loans which are exclusively designed to lower the interest rates even though this kind of policy pays returns.
Controllable Disadvantages
However, you must take a little dose of caution in this variety of policy.
One of the apparent disadvantages under this plan is that of excessive borrowing because it may cause the policy to lapse. As a result, all of the money considered as profit in the policy is totally taxable at ordinary income tax rates. A profit in a life plan, by the way, is the total amount of money that exceeded the policy premiums you paid to the company. In order to avoid this, evade from series borrowing.
Solution
To be able to uphold the existence of your insurance policy, you may request the company you are dealing with, to monitor your loans. They must advise you when your loans go beyond the limit. This will help you ensure that policy will not lapse and let you know whether the rate of your policy loan is no longer sustainable. The interest being charged to your cash surrender value will expedite the time it takes for the policy to expire due to policy loans. If this happens, you need to ensure that you are engaging in a company that offers a reduced paid up insurance plan once your policy lapses because of excessive loans. Moreover, you must work with an insurance company of a zero percent policy loan.
Factors to be considered
If you intend to apply for a whole life insurance as income for retiring age, be sure that you are paying high premiums throughout the working years of your existence. Amount of surrender cash value available for policy loans and withdrawals will be maximized, as well as the dividend you will be collecting the moment you avail of the policy. Try to purchase your plan from a mutual life insurance company that is owned by its policyholders who share in the company's surplus earnings. It also gives dividends to your whole life policy and may give more attractive policy features. Lastly, it always works for the plan holder's benefit.
by: Cindy McGrant
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