Life Insurance Blog

buy whole life when your young
April 29th, 2010
in Life Insurance

Whole life is a great product to buy and the younger you are when you buy it, the better off you are.  When you buy whole life insurance you lock into the mortality of the age of purchase.   In other words, the younger you are, the lower the mortality of the policy and the lower the premium is you lock into.  The premium of whole life never increases, so it will remain level until age 100.  

On top of locking into the mortality of whole life, it is also beneficial to get the policy going early from a cash value perspective.   The earlier you start the more time you have to accumulate a very significant amount of cash value inside of the policy.   The cash value can be used for policy loans to buy things during the course of your life, make investments, etc.    The cash value also can grow into a substantial amount of money and can be used as a source of retirement income.    The money grows inside of the policy on a tax-deferred basis and can be drawn out in retirement on a tax free basis.   The way that you would do this is to take withdrawals from the policy until you reached your cost basis.   The withdrawals wouldn’t be considered taxable as it is return of the money you have contributed.   Once you reach the cost basis, then you start taking money out with preferred policy loans.   Some interest will be charged, but you will avoid paying taxes on the loans.

It is great to have a permanent whole life policy when you reach retirement.  Many folks will be ending their terms and have no insurance.   It will allow you to have insurance into your retirement years and have a very reasonable premium.

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