One of the advantages of a 20-Pay Whole Life Insurance policy is that it features premiums paid for 20 years and is able to build up cash value quickly. This policy is ideal for insuring children as well as for individuals who desire to make a limited number of premium payments. This policy provides you with the confidence of permanent life insurance protection, with premiums that never increase, regardless of your age or health.
The contract you are issued will accumulate cash values that are tax-deferred until the monies are received. It works similar to dividends and increases in value each year. Your death benefit will be paid to your beneficiaries’ income tax-free and certificates may even be eligible for a refund. The death benefit offers security by providing money to help pay for funeral costs and take care of debts.
Is 20 whole life coverage cost efficient?
While premiums for 20 whole life insurance can be much higher than premiums you would normally pay for the same amount of term insurance, they are less than the premiums you would eventually pay over time if you were to keep renewing a term insurance policy up through the insured’s later years.
Whole life insurance is designed to provide coverage on the insured for the insured’s entire life as long as premiums are paid and the policy has not been surrendered. In contrast, term life insurance provides coverage only for a fixed period as stated in the policy.
You do have the option of purchasing a non-participating whole life policy, which has a level premium and face value amount during your entire life. The advantages of this policy are its fixed costs and relatively low out-of-pocket premium payments. However, since the policy is non-participating it does not pay you any dividends.
Within the two broad categories of traditional non-participating whole life insurance and participating whole life insurance you also have various whole life plans that are available for you to choose from. Sit down with an agent and discuss your options, the terms of each contract in order to make an informed decision as to whether 20-Pay Whole Life Insurance is right for you.