Life Insurance is for the LIVING: Build your assets while protecting your family

Most folks think of life insurance as just something you get so your family will be able to bury you and pay off the bills if you should die before they do. This perception of whole life could not be more limited.
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Simply explained, whole life insurance is an inexpensive way to build your estate, protect your family while you are young, and have something for yourself when you reach retirement. Unlike playing the stock market or attempting the lottery, you can't lose your investment.

What is it, and what are the advantages?

Good Investment for Your Family
Your best option is to purchase "guaranteed" whole life. The guarantee simply means that your benefit will never go down and your premium will never go up. That is, it is guaranteed level both in cost and coverage. So, if you die leaving a family and bills, your loved ones are always protected with your initial benefit.

In addition to the basic death benefit, your whole life policy can have a wide variety of options from spouse or children's term riders, to disability waiver of premium, to additional indemnity for accidental death, and even unemployment waiver of premium. The available options depend on the company. Most of the riders drop off at various times, which will lower your premium at that time. Thus you won't ever be paying for coverage you don't have.

Good Investment for Yourself
Whole life insurance builds cash value. Unlike term insurance, cash value means that if you surrendered the policy back to the company, they would pay you the cash value. Of course, if the policy is at least partially for final expenses, you won't want to do that. However, that cash value can be used in other ways. First, it increases the value of your estate without increasing your taxes. Secondly, it gives you a source for loans in the event of an emergency. You really don't even have to pay back the loan as long as you pay the interest each year so it doesn't eat into your cash value.

Finally, the government allows you to make a transaction called a "1035 exchange" with a life insurance policy that has cash value. A 1035 exchange is simply rolling the cash of the policy into a fixed annuity product. The annuity will not require any additional premium, but will instead gain yearly compounded interest that will allow your money to grow with no further contribution from you. If you need some cash, you can take it out of your annuity without borrowing. It is your money. If you need a continuous stream of income added to your social security to live on, you can take an "immediate annuity" meaning the principle will be surrendered for a monthly income that you cannot outlive. You or your beneficiary will always get more than the amount of money you surrendered. Finally, if you do not need to take money out of the annuity, it will go to your beneficiary upon your death without first going through probate. Although there may be a small amount of tax on the interest gained as an annuity, the proceeds will provide a death benefit for final expenses and a legacy for your heirs as well.
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