Whole Life Insurance


Whole Life Insurance

Everybody gather around; it’s time to talk life insurance. Okay, don’t everybody come running up at once. Today we are going to discuss whole life insurance. For those that don’t know me, I grew up in an era in which salesman came to your home to sale you everything. There was the vacuum cleaner salesman, the linen service salesman, the milk man, the encyclopedia salesman and the ever-dependable insurance salesman.

What was so cool about the insurance salesman was the fact that after he sold you the policy he would save you the $0.02 postage by stopping by and picking up the premiums every month. So, as a youth, I heard all kinds of discussions about life insurance. You guys know that I am extremely analytical; which is a simple way of saying I am a master at transforming a mole hill into a mountain. With that being said, I took the term “whole life” to an entirely different level.

Before I get too carried away with my story, let me just explain that whole life insurance is simply a policy that has fixed premiums with a set payout. What makes whole life insurance different is its investment component. As you pay your premiums, you policy builds a cash value that you can cash out of borrow against. Sounds pretty simple right? Not for a 10 year old kid with a conspiracy complex.

When the insurance salesman leaves, with my mother’s money, I might add (I swear this woman bought an insurance policy every month. We had a lot of relatives in California, I wonder could this all be tied to the annual brush fires there? Na! [Inside joke with the publisher, read my other posts to catch up]). I asked my mother if what she just bought was a whole life insurance policy, what she was going to do with the partial one’s she had. I also wanted to know how many partial policies did it take to equal a whole. You should have seen the puzzled look on my mother’s face. For the average mother, the puzzled look would have simply been in response to the question. My mother knew that at least a two hour discussion was about to ensue.

I don’t know why she was so shocked that I had those questions. You can’t expect a child that is being taught fractions and decimals to hear the word “whole” and not have questions.

What is she getting all flustered for? It’s a simple question, and if you can’t answer it, you probably should not have given that man your money. I am sure dad is going to want to know why you have been buying partial life insurance policies anyway. Can you partially die? Can you partially be buried? I am going to need something concrete to work with here, mother.

In case you are wondering, I was not the child that you could tell, “Let’s talk about it later.” No, I needed answers to bring some type of symmetry to my thought processes. I needed to reconcile this entire “whole life insurance” concept. Once she explained it to me, I just said, what in the world does “whole” have to do with it?

Why I love Life Insurance

There are many things I love. My family and chocolate are just a few. But do you know why I love life insurance? It is true. Let me count the ways.

  1. It can provide a way for my family to pay off all of the mistakes we made in using our credit cards.
  2. It can help pay for a college education for my kids.
  3. It can help leave a legacy for my college or a favorite charity even though I don’t have lots of money.
  4. It can pay off my home, assuring my family has a place to live that they love.
  5. It can give my kids a financial headstart even though I may not be around.
  6. It is affordable and I have options of what type to buy, whole life or term.
  7. It allows me to meet new people like an insurance agent.
  8. I helped me learn a new oxymoron…"death benefits."
  9. It makes me feel better.

Oh, I’m sure there are many reasons to love life insurance but these are just a few of mine. My favorite reason for loving life insurance? It makes me feel better. I bet it will make you feel better too.

Does life insurance accumulate cash? (sometimes!)

Life insurance is not exactly a sexy or exciting purchase. You get to pay your premiums every month knowing full well that you will never live to see the benefit of it. Your family will, but you won’t. "What’s in it for me," the more selfish of us may ask. Well, if you purchase whole life, universal life or variable universal life insurance instead of term life insurance, there might just be a pot of gold before you reach the end of your life’s rainbow.

With universal life, variable universal life or whole life policies, part of your premiums go into an investment vehicle that builds cash value as you go along. "Great," you’re thinking, "More cash for my ungrateful survivors." That’s not the case. This money builds tax free and it’s technically your money. Most people will leave it in until it gets high enough that the interest will pay their premiums and they get essentially free life insurance for the rest of their lives, but others withdraw some of the cash, particularly in times of need. Probably the most popular option for people with these policies is to leave the cash in the investments, but borrow against it when they need money.

The bottom line is that if you want a life insurance policy that does more than, well, insure your life, they’re out there. You can get a variable universal life, whole life or universal life insurance policy that will accumulate cash for as long as you own the policy, as long as the premiums are paid.

Can life insurance finance a new business?

Take four minutes to watch Debbie’s story.  In this story, you will see how Bob, a caring husb and found a way to protect his family while saving to start a new business.

Bob protected his family while saving to start a new business

A little bit of planning went a long long way.

Karl Susman, Agent