Key Features of Whole Life Insurance

Lifetime Coverage

Whole life insurance guarantees a death benefit payout to beneficiaries whenever the insured passes away, provided premiums are paid for agreed and specified length of time. This Death Benefit payout is given to beneficiaries tax free.

Premiums

Base Premiums are fixed and do not increase with age or declining health.

Paid Up Addition (PUA)

A portion of your premium is flexible to a large degree based on your wishes and ability to pay. When you do pay the PUA portion, you have fully paid for this small bit of Life insurance that will continue to grow within your policy pushing DB and CV to snowball with time.

Cash Value

Rises and grows based on these 2 above components over time. The premiums go to the insurance company to grow the cash value inside your policy; tax-deferred at a guaranteed rate set by the insurance company. It will also grow in a non-guaranteed way. That non-guaranteed payment; the dividend, once paid locks in and becomes a permanent part of your CV that grows along with all the other capital you’ve sent to the policy. This cash value can be borrowed any time you want, for anything you want, with no questions as to the use of the loan.

Whole Life Insurance Benefits

Financial Security

Whole life insurance provides peace of mind by ensuring that beneficiaries receive a guaranteed death benefit, which can be used to continue with your normal Life Style, covering expenses, debt repayment, education, or a vacation. Or to use the money to purchase new policies to perpetuate this process and keep the money in your family for future generational use.

Cash Value Growth

The cash value component grows over time, providing a financial resource that policyholders can access through loans or withdrawals. Whether you’re a farmer managing your finances in Iowa, or a business owner looking to build financial stability, whole life insurance offers flexibility and long-term benefits.

Tax Advantages

The cash value grows tax-deferred, and policy loans are not considered taxable income as long as the policy remains in force.

Dividends

All whole life policies created at “Be My Own Bank” are with a true Mutual company, meaning they pay dividends to policyholders, because the policy owner is part owner of that insurance company. These dividends can be used to reduce premiums, increase the death benefit, or be taken as cash. They can also be used as passive income during retirement.

Whole Life Insurance vs. Term: Key Differences

Cost

Whole life insurance premiums are generally higher than those for term life insurance. Think of term as renting life insurance. Just like renting a home or leasing a car, the cost are lower because at some point you may move out of the rental and give up the lease of the car. Leaving the asset with the owner of the home and the dealership.

The higher cost reflects the lifetime coverage. Actuarily (math, science, lifestyle, ect,) speaking they are calculated with the same basis of risk management that Life Insurance companies are expertly qualified to manage. And the insurance company knows exactly what it will cost to insure you over the course of your life.

Term insurance does have its place, and can be very useful. However, keep in mind Term Insurance only pays out between 1-2% of the time over the term (10, 20, 30 years) of that policy. Again there is a place that can be very beneficial to the insured.

Complexity

Whole life policies can seem complex, with various riders and options that can be confusing. Once you spend a little time understanding the terms and learn how to think about risk management you will come to see it all makes perfect sense. It is good to understand all aspects of the policy. This will come over time, as we will continue to answer your questions as they come up. And we have and continue to put out video, and podcast to help you come to more clarity. And don’t be surprised if you forget and we go over it again, that’s completely normal. We are here to guide you in the understanding of these aspects.

Conclusion

Whole life insurance is a valuable foundational tool for those seeking to keep and control more, if not all of your capital. And as a bonus, lifetime coverage and protection for their loved ones.  The growing and controlling of the cash value component that allows you to function and act as the banker for your family now, and well into the future, can become part of your Legacy. It offers stability and long-term benefits. Whether you’re in Iowa or anywhere else in the country, carefully assessing your financial goals, budget, and needs is crucial. Consulting with us can help determine how whole life insurance may be the right choice for your overall foundational financial strategy.

We insure everything in our lives. Many times the only thing we don’t insure is the most valuable asset we have, which is us, and our ability to grow our wealth. You are the most valuable asset to your family, insure yourself.