Here are the 6 reasons:
Assured Protection
When you apply for life insurance, you are assured that your beneficiaries will receive the lump sum as agreed with the insurer in case of death. As the insured, it is advisable to ensure that you have paid all the premiums as per the policy and that you have no outstanding loans that may bar them from receiving the proceeds. The money received from the insurance will be a safety net to your dependents, the business, and any other need that requires your financial attention.
Income Substitute
In a family where one is the main financial provider, the loss of such income can result in a family crisis. Life insurance can replace the loss of income due to death. To provide financial security to your family, subscribing to a whole life policy will put them in a safe financial position in the event of your death. They will be able to pay for any outstanding debts and cater to current expenditure before they find a way to earn some extra income. It also saves them from humiliation by the creditors once they are gone since the lump sum will be used to offset dues.
Dividend Potential
Some insurance companies offer dividends to their clients once you subscribe to a whole life policy. Although these dividends are not a must for the policyholders, you will be a beneficiary if the insurer rolls out dividends. Once issued, these dividends can choose to be given as cash, opt to use them to pay some premiums, or purchase another cover using them.
Guaranteed Money Value Growth
When you select a given life policy and start paying premiums, as you continue to pay, your money is subjected to a certain growth rate over time. Depending on your policy period, there will be an increase in the cash, and it can be used to offset some of the bills once it is paid to your beneficiaries. The growth rate helps increase the amount so that it can be used to carry out some of the major projects that you might have started and not finished before you passed on.
Variety Riders Choice
Insurance companies have modified their covers in that the insured can benefit from it in other different ways. These companies allow you to choose different riders and continue making your premium payments without doing underwriting once again. You can choose to use the face value to pay for chronic illnesses, use the money if you become disabled, or even buy insurance covers for your children. When you have an agent, he is the best person to help you through the process and, most importantly, to guide you in selecting the best riders for your policy.
Tax-free Benefits
Most of these proceeds from insurance are not subjected to any form of tax regardless of the amount. The proceeds being tax-free means that your beneficiaries will receive all the amount in the cover without any deductions, and it can be a safe way of ensuring that your loved ones will acquire the benefits as per your plan, which they can use in payment of pending bills or completion of any projects that you might have started.
When you choose the whole life policy, ensure you first understand the financial needs of your beneficiaries so that you can settle for the best option. Also, be keen to make your payments at the right time since unpaid premiums can slow the claim processing. Your beneficiaries should also have all the relevant details about the premium you have chosen and how to go about it if the risk resulting in loss occurs.
