Advantages of Limited Payment Whole Life Insurance

Limited payment whole life insurance has become popular with many people who want to take advantage of the insurance protection it offers, but don’t want to pay high premiums like those associated with traditional whole life policies. A limited payment whole life policy, also known as level term insurance, allows you to purchase a low-cost life insurance policy that lasts until you reach the age of 100 or more at which point you can either renew your policy or let it lapse and collect the cash value instead. Below are three advantages of this type of policy that you may not be aware of.

 

 

What is limited payment whole life insurance?

Typically, as a policyholder, you make a single lump-sum payment to your whole life insurance provider on day one. The sum you pay will be based on factors like your age and expected mortality rate; essentially, you’re paying for an approximation of how much it might cost to cover your future medical expenses. For example, if you’re 20 years old and in good health—meaning that statistically speaking, there’s less chance you could die soon—you might pay about $1,000 for a plan with $1 million in coverage.

 

 

How much does it cost?

When you’re looking for life insurance, you’ll see different types of plans and various options to choose from. While each type has its own benefits, one particularly common type is called whole life. Whole life insurance does exactly what it sounds like: It covers your whole life in case something happens to you or a loved one. The best part? A traditional whole life plan doesn’t require any payments during your lifetime—which means you don’t have to worry about how much more expensive premiums will get as you age. That being said, there are several factors that affect how much limited payment whole life insurance costs.

 

 

How much can I save?

Instead of paying premiums upfront, with limited payment whole life insurance you pay a premium each month. Once you’ve paid off your policy over several years or decades, you receive a substantial payout that can be used to cover your funeral costs and final wishes. If you don’t use it all up on burial costs, consider investing what’s left. You won’t have to worry about your family having money for unexpected expenses while they deal with grief. It’s comforting knowing that they won’t have to worry about scraping together cash in an emergency like that. They can count on you making sure things are taken care of now and in the future.

 

 

What are the investment options?

The best part about whole life insurance is that it’s an investment product as well. You can invest your money in any financial vehicle you choose (stocks, bonds, mutual funds), as long as it isn’t a non-insurance related stock option. You can even decide to cash out some or all of your policy at any time for whatever reason—it just has to be approved by the insurer first. With limited payment whole life insurance, you can start planning for your future from day one. Start small and add onto your policy over time so that when it comes time to claim benefits, you have enough saved up for retirement!

 

 

What do I need to qualify?

This type of insurance is purchased by individuals who have limited assets and/or income but wish to build up savings for their retirement. Many people may be surprised to learn that savings for retirement can start at as little as $15 per month, with substantial tax benefits being realized by those who purchase Limited Payment or Substantially Equal Periodic Payments whole life insurance. Moreover, purchasing a smaller policy with substantially equal payments allows investors to purchase larger quantities of shares in order to grow their portfolios while also protecting their heirs from creditors and lawsuits. Finally, unlike many other types of policies, there are no health questions involved during your application process.

 

 

How long will it take to build up cash value?

Cash value accumulation is slow, but it’s easy to add to your policy. With limited payment whole life insurance, you can increase your cash value by making additional premium payments. Each year, you can increase your premium by a percentage equal to its current cash value. Most whole life policies offer a minimum annual payment equal to one or two percent of their cash value. While these small increases won’t result in huge gains for your policy over time, they are an easy way to save on taxes without making drastic changes in your lifestyle. Plus, there’s no penalty for early withdrawal if you need money from your policy now!

 

 

Is there a better alternative?

 

There are two main types of life insurance: Term and Permanent. Most people think that Term Life Insurance is cheaper than Permanent Life, but that’s not always true. In fact, in some cases, Permanent insurance may be better for you depending on your particular situation.