A whole life insurance policy completely makes sense if you are looking for a plan that covers you for life and gives a payout to your beneficiaries when you die. It’s better than term life policies that cover you for a specific term and then expire after a certain age. So, you get nothing once your policy expires.
Gary P. Cubeta from Insurance for final expenses discusses how whole life insurance plans can be an essential part of your long-term financial planning. It not only gives you cash benefits but tax exemptions. There are many aspects to a whole life insurance policy, and you must look at each of them to make the right decision. Here is a list of features you should check before making a purchase.
Features You Must Check When Buying Whole Life Insurance for Final Expense
Death benefit
It is also called your policy’s face value, which means the bulk amount that your family will receive on your passing. Insurance policies like Prosperity Life offer full death benefits after a two-year waiting time. But there are certain conditions for payment if the person dies within the waiting year. The amount varies from policy to policy, which could be some percentage over the premium paid. This amount received is exempted from any taxes.
You may go for products such as whole life final expense insurance. The benefit of this kind of policy is that you get some amount after your death. It’s a less expensive option as the face value will be less too, but enough for your final expense.
The average cost of a funeral can go up to $10,000 and even more in some cases. A whole life insurance final expense policy will be like an emergency fund to help your family cover your burial expenses.
Cash Value
A premium is an amount that you pay during the duration of your policy. Depending upon the amount and type of premium you pay, your policy will have a cash value. It’s the most critical aspect of any whole life insurance policy you choose. Your policy builds over a period with your premiums and the interest paid by your insurer.
The money offered as the cash value is not the value you have accumulated but what your company offers in the contract. Look for policies that have a potentially good face value and provide more death benefits. You can ask your insurance company to illustrate how your policy will build up over time to get a fair idea about it.
Riders
This feature is often overlooked but one of the essential features of any whole life insurance policy. Look for policy providers that offer riders. Policies like Prosperity Life feature an accelerated death benefit rider, which you get without any extra cost. Having these riders on your insurance will ensure more benefits.
Riders such as accidental death give death benefits on uncertain accident deaths. Terminal illness rider can offer up to 25 to 50 percent of the death benefit if you are diagnosed with a life-threatening illness. However, this amount will be deducted from the total death benefit received at your death. If you are diagnosed with AIDS, HIV, kidney disease, or other illnesses mentioned in the list of policy providers, you might not qualify for it. So, it’s better to discuss with an independent agent about all the conditions in your policy to know what benefits you are getting. You can also analyze if it’s worth the investment or not.
