Advantages And Disadvantages Of Whole Life Insurance

Whole life insurance is a more traditional form of life insurance but it is more expensive compared to a term life insurance. This policy gives death benefits and accrues cash value overtime. The death benefit and premium typically remains the same over the span of the policy. One of the biggest advantages of this insurance is that the policy remains active even all the premiums have been paid in full. Building up cash value is another advantage of whole life insurance. The insurance company’s investment to the policyholder’s premium will return in the form of cash value. The policyholders will have tax benefits to the cash value that is generated and it can also be borrowed by the policyholder to a certain amount from the cash value

This policy will give a death benefit to the beneficiary if the policyholder accidentally dies or suffers dismemberment. “Accidental death” means a death is caused by unanticipated circumstances unrelated to the body. In other words, illness cannot be the caused of the death. It also doesn’t cover death caused by “malfunction of the body”, such as stroke or heart attack while driving. Most policies reject coverage for death caused by suicide (Gorey, 2016); other policy coverage only starts once it has been in effect for a specific duration of time, such as 24 months. It also enforces a time limit on deaths caused by an accident. In most cases, if the policyholder is involved in an accident that eventually causes death, the policy will only pay if death happens within 90 days of the accident. Most policies also specify that death must result directly from the injuries received in the accident, for example, if the insured involved in a car accident but died from an infection got in the hospital, the insurance company would not pay the

In most cases, the policy gives a specified portion of the death benefit for dismemberment. For example, if the policyholder loses one leg or one arm, the policy will pay half of the death benefit. The insured might get the entire face value of the death benefit if he loses two or more limbs (any combination of arms and legs). After this, the insurance company will most likely terminate the policy because it already paid out the entire face value. This policy also covers sudden loss of vision. The same principles apply: the insured will receive half of the death benefit if an individual lost one eye, and the insured will receive the entire face value if the person lost both eyes. Some AD&D policies give coverage for loss of hearing or speech, paraplegia (paralysis characterized by loss of movement or feeling in the lower half of the body), hemiplegia (paralysis of one half of the body), triplegia (the paralysis of three extremities), uniplegia (complete and irreversible paralysis of one limb) and the loss of a thumb and index finger of the same