Tuesday, January 08, 2008

A Better Future With Whole Life Insurance

By John Dale

Life insurance is a gift to those we care about the most. When we are no longer there to provide for our family, we can still make sure that our loved ones are cared for and can still live and thrive even when we can no longer be there to provide the money that we otherwise would provide for our families. Imagine how you would feel if your children could not go to university because the money was not available, or our family could not continue to live in their home because we are no longer there to provide the financial support they need and you can start to see why life insurance is so necessary.

There are broadly two major types of life insurance policy commonly available. Term life insurance is the cheapest form of insurance but has a limit, the term of the policy, for which it will provide protection. Whole of life insurance policies provide protection for our entire life irrespective of how long we may live and so they are vitally important for any financial protection plans that we set up.

Sometimes the whole life insurance bonds itself with investment fund; it is linked with the policy itself. In previous years some kind of premium was also paid with the lifetime insurance with some of it allocated to the investment fund. The policy starts building its own value as cash. Such funds can be used for premiums to be maintained in coming years and can be used in emergency. It provides financial assistance to holder of the policy whenever he/she needs it.

In previous years when the holder of the policy was younger the costs would be quiet low as compared to policies of others. As the age of the holder of the policy increases the covering cost of the insurance and the premiums may also increase. The holder of the policy has an option of reducing the life insurance level cover or paying the premium. If one is unable to pay the extra premium then the cover should be reduced unless it is found from another source. Like this the policy itself can retrieve the premiums from another source if someone is unable to pay the extra premium.

This is where the investment element comes into its own. The investment fund can be used to supplement premiums paid by the insured to ensure that even though the cost of insurance cover has increased, the cover can be maintained at no extra cost to the policy holder. In some instances, premiums can cease being paid by the insured policy holder as the cost can be covered from the investment fund alone.

Whole of life insurance contracts tend to be very useful when a policy holder must ensure that a lump sum is available upon death. With many of us falling into the tax bracket for paying inheritance tax, it makes sense to ensure that the tax bill can be paid directly from the proceeds of a whole of life insurance policy. This protects the estate from the ravages of the tax man who must be paid first before the estate can be released to those you really want to benefit - your family and loved ones.

Whole of life insurance contracts are very flexible policies providing a wide range of options. The ability to take premium holidays is available because there is an investment fund available to continue cover. The investment fund belongs to the policy holder so if there is a need for emergency funds or collateral to secure a loan or mortgage, extra avenues are open to the policy holder that are simply not provided by other non-investment based insurance contracts.

To understand how the whole life insurance works you need to do some research work first especially on insurance cover and investment funds. In addition, if you are to find the best company then you need to take different whole life insurance quote from different companies. To understand and find the best insurance policy to protect your loved ones financially is important to ensure that they can enjoy a better life.

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