Whole life insurance is called whole life because it covers you for your whole life.
That seems pretty clear!
But many people don’t understand why whole life is important.
Here’s a simple explanation.
What does whole life insurance do?
The whole point (no pun intended) of life insurance is to make life easier for the people you leave behind when you die.
Most people don’t have enough money saved up to pay for things they might need at the end of life, like their funeral or the out-of-pocket medical costs they might run up during a long illness. A whole life insurance policy can help pay for some of these costs, so your family doesn’t have to.
“Life insurance is a gift of love. You buy it because you care about the people who are left behind,” said Pam Jenkins, assistant vice president for product and market development at Colonial Life. “Adjusting to the loss of a family member is difficult enough; life insurance helps employees protect their families from a potentially devastating financial loss, as well. A strong whole life policy simplifies the process of ensuring a family’s protection during a period of loss.”
When should you buy whole life?
Whole life can be pretty affordable, but even more so if you buy it while you’re young. It’s a good way to start a solid foundation of financial protection.
“You’re never younger or healthier than you are today”, says Pam Jenkins, “so buying life insurance while it is most affordable makes perfect sense.”
Some other things you should know
Different whole life policies have different features and benefits. Some cover long-term care. Some pay out early if you have a terminal illness. Some let you pay a little more per month so you can stop paying premiums when you’re retired and on a fixed income. And you might be able to buy policies for your spouse and children.
If you buy whole life at work, you’ll probably get cheaper rates. When you retire, you keep the policy — if your premiums were deducted from your paycheck you can get billed at your home.
With the typical funeral costing between $7,500 and $8,500, and out-of-pocket medical costs going up every year, it’s easy to see how a whole life benefit could come in handy. You could think of it as a really nice gift to leave your family.
“It’s comforting to know that your family’s lifestyle won’t be dramatically impacted because of bills that can’t be paid,” Jenkins says. “When a simple decision to purchase a life insurance policy can make that kind of difference, why not do it?”