Most people recognize the need for life insurance, but they may not be sure which coverage is best for them. There are two main options to choose from — whole life and term life. Whole life insurance is coverage that guarantees to pay a benefit upon the death of the insured. Term life is only good for an agreed-upon span of time, typically 10 to 30 years.
Sometimes referred to as permanent life insurance, whole life may not be the best choice for everyone, but it has some advantages that you should be aware of. If you need assistance with life insurance and live in the state of Texas, Evans, Ewan & Brady Insurance Agency in Georgetown, Texas, can help you decide which option is best for you and your family’s needs — now and in the future.
What is whole life insurance?
A whole life insurance policy covers the policyholder’s entire lifetime. For instance, a policy purchased in a person’s 20s will still pay out if that person lives to be 90, and the premium amount stays the same for the life of the policy. What’s more, a whole life insurance policy will pay out a sum to the beneficiary or beneficiaries named by the policyholder, as long as all premiums were paid. Finally, whole life insurance includes a savings component that allows the policyholder access to the accrued cash during their lifetime. This money can be withdrawn or borrowed against by the policyholder.
Comparing whole life and term life insurance
How can you decide which type of life insurance is right for you? Whole life insurance costs more than a term life policy because the payout is guaranteed. Many people like that whole life insurance acts like an investment as well as insurance. This is due to the policy’s cash value. This savings part of a whole life policy allows the policyholder to accumulate interest on a tax-deferred basis.
If you are interested in the cash value of a whole life policy, you can increase the funds available by paying more than your scheduled premium. You can also reinvest any dividends into the cash value to earn interest.
It’s important to be aware that the amount of cash that can be withdrawn from a whole life policy cannot exceed the total amount of premiums paid. Taking a withdrawal from your whole life policy does not reduce the death benefit amount, only the cash value of the policy. However, any loans taken out against the policy will reduce the death benefit by whatever amount of the loan remains unpaid at the time of the policyholder’s death.
Contact Evans, Ewan & Brady to Learn More About Whole Life Insurance
Evans, Ewan & Brady is located in the greater Austin area, which encompasses Travis, Bell, and Williamson counties, but we serve the insurance needs of the entire state of Texas. At Evans, Ewan & Brady, we make sure our clients are educated about all their insurance options and help them understand what policy is right for them. We will find the best coverage and rates available.
Call Evans, Ewan & Brady today at 512-869-1511 and see how we can help protect you and meet all your insurance needs.