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When Is Whole Life Insurance Worth It?
Whole life insurance may be worthwhile for some, but not for others. Policies have an added layer of complexity to them that make them harder to understand. Plus, they are usually more expensive than term policies. Find out if a whole life policy could be worth it for you.
Whole Life Insurance Might Be Worth It For You If:
- You have a high annual income (over $250,000 annually or have over $1 million in existing assets)
- You want predictable premiums that will stay the same throughout the life of the policy
- You want a policy with an investment component or cash value that you can borrow or withdraw from while you’re still living
- You want lifetime coverage that ensures your death benefit will be paid out and used one day
- You’re set to owe a good amount of federal or state estate taxes on your assets when you die, and want to provide money to pay them
- You’ve maxed out your other tax-deferred investment options, such as your 401k, IRA or Roth IRA
According to Investopedia, “Whole life insurance provides policyholders with the ability to accumulate wealth as regular premium payments cover insurance costs. These payments also contribute to equity growth in a savings account. Dividends, or interest, can build up in this account, tax-deferred.”
However, if you’re just in market for life insurance to replace your income, pay off outstanding debt, or financially protect your dependents in the event you die unexpectedly, term life insurance may be a better option for you.
*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.