About
Advertisements
Ad
If you are considering purchasing life insurance, your biggest decision is whether or not to get a term life policy or a whole life policy. While there are many varieties of life insurance policies – knowing whether you want a term or whole life policy is your first and most important decision to make.
Term Life Insurance Policies
Term life insurance offers a death benefit if you should pass away within a pre-determined number of years. Because it is limited to a specific time period, term life insurance policies are among the least expensive forms of life insurance. At first, you may wonder why anyone would spend money on a temporary life insurance policy – but it’s suitable for younger people who have families at home but maybe don’t have a lot of cash to buy a more expensive policy; or for individuals who have just purchased a home and worry about leaving the burden of the home expense to their spouse if they should die before the mortgage is paid for. Term life insurance policies offer no cash value.
Whole Life Insurance Policies
A whole life insurance policy offers both a death benefit and cash value to the policy holder. The monthly premiums for whole life policies are higher than a term life policy, but it is considered an asset – which means you can borrow against the policy in an emergency. If you do borrow money against your whole life insurance policy, your death benefit is reduced by the amount you borrow if you should die before it is repaid; or if you cash in some of the policy’s equity, the value of the whole life policy is reduced proportionately before the remainder is distributed to your beneficiaries.
Whole life policies do not work like savings accounts, in that you can borrow as much as you pay toward your premiums. Part of your premium accumulates into an asset over time, while part of it is used to pay for the death benefit. For most policy holders, their will not be a significant amount of money earned for the first three to five years you have your policy. In the case of children however, whole life policies purchased for a child who is young can be a significant amount of money when the child becomes an adult.
When the asset has been built in your whole life insurance policy, you can choose to use it as collateral for a loan – any time you need to secure a loan or financing, you can often use your whole life asset as collateral. If you don’t want to secure other financing using your asset as collateral, you may have the option of withdrawing the equity as a loan. Loans taken from your whole life policy must be repaid like any other loan, although you will often get a very good interest rate because the loan is secured against a solid asset.
Related Content:
- Will the Fed Push Inflation to Help the Spenders? While driving to work yesterday, I heard an interesting interview on the Fox Business Network. The discussion was focused on what the Fed would be doing in the coming months to address the multitude of economic...
- Mutually Exclusive: The Friends With Benefits Paradox Many of you may be familiar with the term “friends with benefits”. If you are not it is likely because you’ve been in a stable committed relationship for the last few decades. Friends with benefits...
- Paying off Debt in 9 Steps pt 2 Part two in the series on paying off debt: Throwing away your bills and shredding your credit card payment reminders simply is not going to make the problem go away. Debt is going to hover...
- Lending Club Loans: What Investors Like to See Lending Club lenders have increasingly been leaving notes on borrowers loan listings about what they would like to see the borrower do in order to make their loan more attractive. Often, lenders suggest that borrowers...
- Looking For Life Insurance? Better Learn The Language People that are looking for life insurance to protect their family in the event of the unthinkable often find that they cannot understand the common terms used in the life insurance industry. Without being able...
1 users resposed " Life Insurance as an Asset – And Source for Loans? "
September 16 2009
You might be interested in the posting on term insurance and home mortgages at http://lifeinsurancenoexam.biz/blog
Our Sponsors
Archives
Site Information
Resources
UK IVA Resource
Visit Credit Loan for deals on credit cards.
Saving bonds
Compare a variety of leading savings bonds, ISAs and investments all in one place
Lending Club Scam
Read our write-up on Lending Club to learn if it's a scam or the real thing.
Provident Cash Loans
Provident provide quick unsecured loans for people with bad credit history.
Bad credit loans - Real Finance
Real Personal Finance specialize in unsecured loans for people with bad credit history
Instant decision loans
Use our experts to find loan deals tailored to suit your circumstances.
MoneySolve offers free debt help and advice
For rising debt problems, consider an IVA with Debt Free Direct.
most commented post
- » MagicJack – Scam or Real Thing? - 31
- » Wells Fargo, US Bank, Bank of America and Citibank are on the Brink of Bankruptcy - 27
- » What Happened to Prosper.com? - 12
- » Three of the Unhealthiest Restaurants in the US and How to Eat Healthy at Them. - 7
- » 3 Reasons Debt Consolidation Loans May Not Be The Best Option For Debt Relief - 7
- » The Danger of Reverse Mortgages - 7
- » Hyped-Up Cures or Cash Thievery? - 7
- » How To Save Money On Prescription Drugs - 7
- » Save Money On Your Cell Phone Bill - 7
- » Dave Ramsey Speaks Out on the Economy - 6
recent entries
- Should You Pay Points on a Mortgage?
- Debt Solutions for Severe Debt Problems
- Are No-Exam Life Insurance Policies Worth It?
- How to Avoid Getting Ripped Off While Moving
- Financial Apps for iPad
- Pay Down Debts By Paying More Often
- 5 Easy Ways to Reduce Electric Bills
- Merchant Accounts: What are Small Business Owners’ Options?
- Making the Switch to a Credit Union
- Who Needs A Home Warranty?
recent comments
- adult family home in washington: I like this article. Not just this article, but many articles on this website....
- CONTRERAS28Eva: If you are willing to buy real estate, you will have to get the credit loans. Moreover, my mother...
- rdnp: Health insurance is ridiculously expensive. I have a feel that the new health bill is going to make it worst.
- oolio: uglaaaaaaaaaa
- Financial bondage: Its best to use cash for emergencies if possible. If you use the credit card, pay off the balance...


Recent Comments