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The Benefits of Whole Life Insurance – Elisabeth Dawson – Medium

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“The best investment in the world is the one that pays the most when you need it the most, and that’s life insurance.” –Ben Feldman

As a financial coach, there’s a common thread I’ve noticed among clients, and it’s a resistance to discussing life insurance. I’ve even seen it within my own family. Growing up, my mother never spoke about life insurance, let alone finances in general.

I get it… Life insurance is hard. There are so many questions, and the answers can get pretty confusing. You want to know if you have the right insurance, if you have enough, or if you even need it at all. And the insurance companies aren’t making it any easier to understand, coming up with pretty cryptic names for the different insurance policies. Whole life, term life, universal life… Without a deep understanding of the different policies, you would be totally in the dark as to what it all means!

At the same time, life insurance tends to hold a bit of a stigma of being ‘death’ insurance… And no one wants to be reminded of their mortality. Maybe that’s why 30% of Americans don’t have any sort of life insurance.

Even once you understand the different plans, how much they cost, and their benefits, it can be hard to know what the right kind of insurance is for you. Do you want a policy with cash value? Do you want to invest in the market, or pay a fixed interest rate? Do you want a combination of it all?

It’s exhausting thinking of all the options for life insurance, and it can sometimes feel easier to just put it off. But life insurance is important, beneficial, and one of the best ways to secure a stable financial future for you and your family. That’s why I want to try to focus on just one type of life insurance, so you can get an in-depth understanding of its benefits, its purpose, and why you should consider it.

Are you ready? Let’s talk about whole life insurance.

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What is whole life insurance?

Whole life insurance provides life insurance coverage in addition to life benefits, such as access to cash value via loans, withdraws up to your basis, and cash value accumulation.

Whole life insurance can be a great choice when choosing policies. Not only does it provide you life-long protection, but your policy cannot be canceled as long as you pay your premiums on time. It also has cash value, which means you can take out loans for expenses such as buying a new home or paying for your child’s college tuition. It is also the only life insurance that you can buy for the whole of your life, and it can be made less expensive the longer you live.

The benefits of whole life insurance

Here are three of the biggest benefits to whole life insurance, and how it can be a huge asset to your finances even while you’re still alive.

1. Fixed premiums. Fixed premiums are great, especially if you’re trying to save a certain amount of money every month and adhere to a structured budget. Knowing how much you’ll be paying for life insurance at any given time is crucial to being able to budget properly, and save for retirement. Think about it this way: if you didn’t know how much you paid on your mortgage or your car each month, you wouldn’t be able to know how much money you could comfortably spend and put into a savings account. A fixed premium works the same way by giving you that certainty that allows for goal setting and finance planning.

2. Cash value. What makes whole life insurance so great is that it offers life benefits, not only death benefits. You can use the cash value of your life insurance while you’re still alive, if you need to for any reason. For example, if you need to take out a loan, you can use your life insurance money. That cash value also grows tax-deferred. It can also create an income supplement in your retirement years, and one that’s tax free if designed accurately.

3. Death benefits. While whole life insurance is great because it offers so many life benefits, it still assures the death benefits that we expect from life insurance policies. When most people think about life insurance, they think about those they’ll be leaving behind. After all, the whole point is to make sure your loved ones are cared for after you’re gone. You can be certain there will be a sum left to your beneficiaries and heirs, and this money will be tax-free. This is a huge difference compared to other inherited accounts, such as IRAs and tax-deferred annuities. With those, your beneficiaries could end up losing up to 35 cents on the dollar left to them on federal income tax.

I know the huge amount of information out there about life insurance policies can be daunting. If you don’t have a financial professional to assist you and guide you, it can be difficult to know where to start. Hopefully learning a bit more about whole life insurance and its benefits helps you gain a deeper understanding about life insurance and how important and beneficial it is. And if you’re unsure of how much life insurance you should get, you should reach out to us and we can help you calculate the right amount for you and your family.

Remember how I said my mother never spoke of life insurance? Well, sitting down with a financial advisor when my father was getting ready to retire meant she had to embrace the conversation. And I saw the peace of mind that life insurance gave her!

The resistance to discussing life insurance is understandable, but the better informed you are the more the anxiety of the unknown dissipates. My mother is the perfect example, and you can be, too. Be that 70% of Americans that choose life insurance, and reap the benefits for you and your family.

Ready to Upgrade Your Relationship with Money?

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Elisabeth Dawson is a financial advisor and the author of Wealth by Design. She is also the founder and CEO of Copia Wealth Management Advisors, Inc. and Copia Wealth Management & Insurance Services, designed to help clients achieve financial greatness.

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