Things You Need to Know about Participating Whole Life Insurance

If reading this, there is a good chance you have finally made up your mind to take advantage of a participating whole life insurance. For those who might not know, a participating whole life insurance provides tax-free growth while you’re alive and a tax-free lump-sum payment to your beneficiaries when you die.

This is a type of permanent life insurance that provides you with guaranteed lifetime coverage as long as you pay the policy premiums. Actually, premiums stay the same throughout the premium paying period, so that even as you age or experience health issues, your costs to maintain the policy will not increase.

Aside from its insurance protection, a whole life policy has a tax-advantaged investment component that can help you build a larger estate than you could in a taxable account. The accumulating cash value in your policy grows free of annual taxation.

If this is not enough, participating whole life insurance allows the policy owner to ‘participate’ in the insurance company’s profits. Each year, the company assesses its profit with the participating investment fund’s actual claims and expenses. These profits are then redistributed to you, the policy holder.

So, what are some of the most notable benefits accompanying leveraging participating whole life insurance?  First and foremost, the death benefit and any paid0up additions are distributed tax free to named beneficiaries, thereby enhancing your estate.

When policy dividends are used to purchase additional paid-up insurance in your policy, they form a new accumulated cash-value ‘floor’ that’s guaranteed and can’t be reduced, unless initiated by you, the policy owner.

Guaranteed cash values and policy dividends kept in your policy are not subject to tax on the growth during your lifetime. This helps you meet your long-term financial goals and transfer assets efficiently to your beneficiaries.

We can never conclude without mentioning the fact that you can access the accumulated cash value of your policy at any time. It is accessible through policy loans. Through policy withdrawals of the cash value or by pledging the accumulated cash value as collateral for a tax-free line of credit.

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kamariya Weston is a marketing professional and freelance writer based in London. She has a Bachelor's degree in Marketing from the University of Westminster and has worked in the marketing industry for over seven years. kamariya westons writing has been published in various online publications, covering topics such as social media marketing, content marketing, and digital advertising. In her free time, kamariya weston enjoys traveling, cooking, and practicing photography.

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