by Frank Graham, Owner of Graham Insurance Agency
Most people outlive shorter term policies. That's why it is so cheap! It might be in your best interest to have both coverages - a term and a whole life policy. Whole life or universal whole life (a form of whole life) almost always pays out with a death benefit as long as the customer continues to pay the premium. Cash value is part of that whole policy (which does not exist in a term policy), but it is sometimes sold by inexperienced agents as a retirement benefit. That's not often the best purpose of a whole life policy, nor of the cash accumulation.
What other product do you know that will pay your family $50K - $500K the day after you bought it if you die? Nothing. That's right. Nothing. No other product has this benefit. This is the primary purpose and optimum benefit. However, if you want to help fund your retirement, your payments into this plan provide cash too. If you have unexpected expenses you need to take care of, it is there. Or, in addition, or instead, an opportunity pops up that you want to take advantage of - it is there again. It may be used for a plethora of reasons - from college funds, to expanding your home. What other product offers you funds to borrow at low interest that you technically never have to pay back anyway? Nothing. That's right. Nothing.
Life insurance that has cash value may not outperform a high performing stock. It just isn't the role it plays in your investment portfolio. First and foremost, this is an insurance product. But if you want to accumulate some cash and maybe even see it grow, there's less risk involved in this product than many others, and tax treatment is favorable.
The flexibility of universal life policies makes this specialized product an even more attractive way to protect your family from suffering, loss of income, payment of debt, final expenses, and major expenses such as college if a family member should pass away early and unexpectedly. Maximize your contributions in good years to take full advantage -- or cut back on your premium, if you wish, in tougher years.
Life insurance is a valuable part of a thinking person's portfolio. Only with Farmers will you be certain to get a quality product -- with discounts on other lines of coverage -- that help make complete protection against any financial stress a reality.