Is Whole Life Insurance a Good Investment?

Having life insurance is a necessity, and like other insurance policies, whole life insurance has pros and cons. At the end of the day it all boils down to what you are looking for and what the most important features are for you. Are you most concerned with the rates and your budget? Are you looking for a specific coverage amount or term? Answering these questions will determine which policies are best suited to you.

The Difference

Whole life insurance rates are higher than the rates you will find attached to term life policies. Why is that? Well, the point of whole life insurance is to have it cover you for, you guessed it, your whole life. You will pay the same rate, month over month, and be given the same coverage throughout your life, no matter your age or health, and you don’t have to renew the policy or requalify at any point – so long as you don’t miss any payments. Term life on the other hand is cheaper, but it only provides coverage for a set amount of years and then you have to renew it or let it lapse. While your rates per month are less, there is no guarantee you will qualify for the same policy at the same rate once your term ends. If your health has changed you could find yourself being offered less coverage at higher rates, and rates also automatically increase with age.

Benefits

Once you accept a whole life insurance quote in Canada and begin paying premiums, you no longer need to worry about your life insurance needs. The policy does not have an end date, need to be renewed, or come with routine medical exams. So long as you pay your premiums, you are covered. The premiums themselves also don’t change, allowing you to easily build your insurance costs into your monthly budget with no surprise increases.

Your death benefit is also predetermined and agreed upon. You will know exactly what your beneficiary will receive. Whole life policies also come with a cash value aspect, so if you purchase the policy when you are young, a larger portion of your premium will go into savings for a longer period of time, creating fast growth. As you grow older and more of your premium is dedicated to your actual insurance coverage, you’ll notice that the cash value growth slows down – but its money you can borrow against if needed, so still a good feature.

Pros and Cons

If we really had to do the whole life insurance pros and cons comparison in the most cut-and-dry way possible, it’s fair to say that the pros are: set premiums, guaranteed coverage for life, investment income and cash value. The cons: more expensive premiums, modest investment returns, the cash value can take a while to accumulate.

Whole life insurance is a great thing to have, but let’s be honest, if you are looking to make investment income, a life insurance policy isn’t the place to be doing it. This is a nifty little bonus feature, but not where you want to be sinking your cash if you are looking for major dividends. Is whole life insurance a good investment? Yes, because you will have life insurance forever. Everything beyond that is a bonus.

Always talk to a professional insurance broker to help you determine what policies will work for you and which ones won’t. Whole life insurance rates will vary based on your age at the outset of the policy, so the younger you are when you get the coverage, the better. Don’t wait to get yourself covered, speak to a broker today about all your options.

Hi! I'm Stevie, and I'm interested in everything that surrounds the topic of personal finance. I hope my articles will be of some use to my readers!