Best Whole Life Insurance in Florida – 2018
In most cases you’re going to want to purchase a Whole life insurance policy.
Because temporary, or term, insurance can’t be renewed after about age 80, so if you die after that age, the policy won’t help at all.
Sure, if the purpose of the life insurance is to provide for a temporary need (such as covering loan amounts owing or providing for minor children), then term insurance will often fit the bill, but many of the reasons you might buy life insurance will require whole life insurance.
What is a Whole Life Insurance?
With a whole life insurance policy, each dollar of premiums is split into parts: One part covers the mortality charge, one part covers administrative expenses, and one part goes into the investment component of the policy – the accumulating fund.
Whole life policies offer level premiums (the same each year) for the rest of your life. It’s also possible to have limited pay periods where, for example, you pay the premiums for a period of five or ten years, then no more premiums will be required after that.
As the owner of a “participating” whole life policy, you’ll be entitled to dividends from the insurance company. “Participating” simply means that you may participate in the profits of the insurance company.
Whole Life Insurance and Term Life Insurance Cost
You’ll notice that at the beginning of the whole life insurance policy, the premium is much higher than with the term life insurance.
However as the years go by, the cost of the whole life insurance becomes less than the term policy.
This is because the insurance company saves and invests the extra money you paid in the early years, to cover the increased cost of life insurance in the later years.
The result is an average cost of whole life insurance that is equal from the beginning of the policy until the time of death.
Is a whole life insurance policy right for you?
It might be if…
- You have cottage assets, rental property assets or shares in a business that you would like to transfer to the next generation. If so, the whole life insurance policy can pay for the potentially large income tax bill that will arise on the growth of these assets over your life. In doing so, this may avoid the need to sell the property in order to pay the income tax bill at death. Using a life insurance policy to cover these costs VS. using other savings can be financially advantageous.
- If you have fully funded your retirement accounts, the whole life insurance policy can provide a vehicle for tax free growth.
- If you are in a higher tax bracket in retirement, taking out policy loans can provide tax free income. The interest charged on the and would be relatively smaller than the income tax you would otherwise need to pay, and the policy loan would be paid off by the life insurance upon death.
- If you are looking for a tax efficient way to donate a larger sum of money to charity, this type of policy can be an excellent choice.
- If you are looking to leave an inheritance, it may be more tax efficient to do so through a whole life insurance policy than through savings.
- If you have a disabled child, grand child, spouse or any other person that you would like to ensure receives money upon death in order to continue their care.
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