Life insurance is one of the most important options to maximize your employee benefits package. There are many different types of insurance as we outlined in our previous blog, but we want to highlight the benefits of a whole life insurance plan.
Whole life insurance requires the policyholder to pay level premiums over their lifespan with the non-taxable death benefit payable to a beneficiary. What sets it apart from other life insurance policies is the additional benefit of a savings component that can, in some cases, accumulate cash value.
Here’s a guide and some tips to help you understand the value and benefits of whole life insurance.
- Fixed Monthly Premiums - Unlike universal life insurance where you can adjust the death benefit and premiums, and term life insurance where your premium may increase after the term ends, whole life insurance has fixed monthly premiums that stay the same for the life of the insured.
- Cash Value and Dividends Growth - With a whole life insurance policy, the policy holder is able to make payments that are larger than their scheduled premium (known as pay-up-additions or PUA), adding cash value to their premium that earns interest. Over time these earned dividends continue to earn interest and act as equity for the living policy holder. Due to the accumulation of earned dividends and interest on the cash value, the whole life insurance policy can act as a retirement fund for the policy holder.
- Tax-Free Death Benefit and Cash Loans - Death benefits paid at the time of death are non-taxable, so they’re not part of the beneficiary’s gross taxable income. Cash loans withdrawn by the insured are also non-taxable. The insured may withdraw cash up to the amount of the premium that has already been paid.
- Lifelong Coverage - Unlike term life insurance where the benefit terminates at the end of several years, whole life insurance is a type of permanent life insurance that provides coverage for the life of the insured as long as the policy holder continues to remit payments as scheduled.
These benefits, especially the added cash value to the policy holder, are a few of the reasons to consider a whole life insurance policy for your employee benefits package.
Not sure which plan to choose? Our team at LHUI in Seattle, Washington, can help you decide which life insurance plan and employee benefits are right for your organization. We will meet with you to understand your requirements to serve your employees best. No matter the size of your organization or type of insurance needed, we promise to work alongside you to make sure you make the right decision for yourself and your employees. Schedule a consultation with us today!