Consideration of the value of purchasing a whole life insurance policy is one that offers numerous viewpoints you have to consider what are the whole life insurance pros and cons. One important thing to keeping mind is that there is no right or wrong blanket answer to the question, but rather an importance of each person considering it to make an honest evaluation of who they are and what they are trying to accomplish. What works for one person well, perhaps should not even be up for consideration for someone else. Let’s take a look at and examine a bit some of the pros and cons of whole life insurance.
On the positive side of the ledger, a person purchasing a whole life insurance policy for whatever fixed amount, will know that as long as all terms of the agreement were kept on their part, that agreed upon amount will be paid to their designated heir. The amount that the policy is taken out for never decreases over time which is the case of term insurance. Also, the premium due at the policy’s inception, usually paid in most cases on a monthly basis, will remain the same for the duration of the policy. It will never go up or cost more as a person advances in age. In addition, over time the policy builds up a cash value. At different stages of the process, this cash value may be drawn out if needed or desired, and in different scenarios can be utilized to pay the premiums due. And one of the big advantages is that all money involved with the policy is considered tax free. What this means is that if at some point in the process a person calls upon the cash value available and withdraws money, it is tax free and all of it goes to them. Also, upon their demise, the face amount of the policy paid to their designated heirs is not subject to any taxes.
On the negative side, there is no question whatsoever that the premium you pay is not an inexpensive one. Certainly, as compared to different types of policies offered, it will be substantially more that you will be paying. Part of the reason for this is that the company is taking a portion of your payment and investing it in the effort to make more money. This then is one of the reasons why the policy builds cash value over time, and also why in some cases, a dividend may be paid to the policy holder, although in most cases this is never guaranteed. On the surface this arrangement may not seem a bad thing and it is not. Particularly, people who have difficulty saving on their own may find it useful. But the reality is that the person who is adept at handling their finances can do much better by having a less expensive policy and using the difference in money to invest on their own. In most situations, the return will be significantly greater.
As one can see reviewing the examples given above, the final decision as to what is the best choice to be made regarding the purchase of a whole life insurance policy is truly a personal one that requires careful thought and the realization that it must be the proper fit for those contemplating it. Again, this is not a one size fits all choice, and must be weighed carefully, taking all factors into consideration.
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