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The Return of Whole Life Insurance

Over the last few decades, term life insurance has seemed to be the best way to provide for your family if god forbid you were to die ahead of your scheduled time. And why wouldn't it be? It's low cost coverage to cover a catastrophic event.

Term life insurance is affordable and pays out well, but a new wave of financially savvy people have started to turn back to permanent, or better known as, whole life insurance coverage.

Whole life coverage has gotten a reputation for being expensive; but that's only when compared to its term life brother. Truth be told with a whole life insurance policy, your money remains yours throughout the duration of your whole life plan.

There are many reasons why these life insurance policies have recently become so popular.

First of all, interest rates are still ultra-low, but whole life policies pay out guaranteed rates that go far beyond what could be earned in a savings account or certificate of deposit (CD) with a similar duration. Better yet, taxes do not apply to the cash value growth of a whole life policy. Also, insurance companies offer a variety of different whole life plans that can help policyholders reinvest dividends and increase interest on the cash value, further protecting the investment.

Moreover, although taxes on capital gains and dividends have been recently reduced, the proceeds of whole life policies are generally not taxed, even when the benefactor dies.

In all, whole life policies can do things that term life coverage just cannot offer. For instance, once premium payments accrue enough cash value in the policy, premium costs may be reduced or even eliminated, without affecting the benefits or coverage terms.

Policyholders can even borrow money from their whole life policy's cash value without needing to go through a lengthy loan approval process. And since it's actually the policyholder's money, there's no rush to pay it back.

The takeaway

There are few guarantees in life, but rest assured, when purchasing a permanent life insurance policy, again better known as whole life, one can count on the guaranteed benefits of their coverage.

Every time a term life policy gets renewed, the process of investing begins anew, not to mention that term life coverage can be canceled if a payment is missed or late. With whole life insurance you can both watch your money grow and know with certainty it will be there during times of need whether when you're living your best life or at the end of life.

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