This is Chad McMahan with Protect With Insurance I’m here in beautiful Prescott
Arizona at the County Courthouse and I am gonna talk about Whole Life Insurance today.
Whole life insurance is generally considered to be the best type of life insurance money can buy.
The number one reason is that it never expires ever!
You put a policy in place and it goes until you die. After you die, they send a check to your beneficiary and it’s done. So whether that’s gonna be in a month or whether that’s going to be in 40 years that’s when they send the check after death and you, of course, are responsible for making payments throughout.
If you get to a point that the whole life policy matures and this doesn’t mean
that you’ve paid in the amount of the coverage but it does mean that you’ve
paid in enough to where you don’t have to make payments anymore.
Typically this is significantly down the road in the ballpark of 30-40 years.
It’s a long time typically with these policies if you do reach this point though they send you a
a letter they tell you that the policy is matured and they give you the option of –
(depending upon the company) they give you the option of collecting those funds at
that time or just leave them there for when you pass away and then the
beneficiary receives the check.
From that point, you never need to make another payment ever again. Now, these policies the coverage is never going to change so if you start with a $40,000 policy it’s always going to be a $40,000 policy.
If it is one hundred and fifty dollars a month it’ll always be hundred fifty dollars a month. So those things never change.
Another benefit of a whole life policy is they accrue what’s called cash value.
Now, the cash value is commonly misunderstood and unfortunately life insurance agents most of the time communicate it the wrong way in an unethical way a lot of times.
Even insurance companies will refer to it as a type of savings account.
It is not a savings account, it is an emergency fund. The reason why I make that distinction is a
savings account you put in a hundred dollars you’ve got a hundred dollars in
there plus interest with this you put in a hundred dollars.
It’s only going to accrue depending upon the timing. There’s a timeline
for the investment schedule on how this works but just to give you a rough idea –
you put in a hundred dollars in, let’s say only ten or twenty dollars stays in
there as cash value the rest of it goes to the insurance company.
It does cost them money to run a business and that’s fair and since they are taking all the risk, they should get they get the lion’s share of it.
There are on the hook for the full coverage amount – the death benefit amount. But it’s important to understand that that cash value is an emergency fund.
Down the road, if you need it you can tap into it. But you also need to understand that if you tap into it they’re going to send you your death benefit minus what you took out. Say, for example, you pull out $5,000 because you have bills that you did not expect and you had a whole life policy for $40,000 they’re gonna send $40,000 minus anything that you pulled out.
So that’s not your money to play from but an emergency fund.
It’s an excellent resource so that is how I always communicate that to my clients. So the emergency fund is there if you need it but again remember the reason why we put together a whole life policy it’s for your beneficiaries. So that they have these funds whether the funds are needed. For cremation or burial whether they’re needed as a financial gift, whether they’re needed as income replacement, the travel costs or whatever it may be.
Other bills that you know they’re going to be that are gonna happen unknown bills whatever the reason you know that that money is going to be there for them life insurance, of course, we always get for the ones we love which makes it one of the most important kinds of insurance that’s out there.
So I hope that that helps understanding whole life insurance stay tuned to my other videos as well for other pointers here and there.
Feel free to reach out to me directly with questions as well I’m always happy to help again this is Chad McMahan signing out from beautiful Prescott, Arizona talking about life insurance stay safe out there.
If you are located in the Cottonwood, Sedona, Flagstaff or Prescott, Arizona area and are looking for more information on affordable Life Insurance call (928) 323-0933