Advantages and Disadvantages of Whole Life Insurance - Advantages

Q. What are the advantages and disadvantages of whole life insurance?

A. Below is a list of the advantages of whole life insurance products -

• A guaranteed ceiling on mortality and expense charges and a guaranteed floor on interest credited to cash value
• Safety due to close regulatory supervision of company solvency
• There is an opportunity for investment management because life insurance companies provide skilled personnel and broadly diversified investment portfolios
• Cash value interest or earnings accumulate tax-free or tax-deferred, depending on whether gains are distributed at death or during lifetime
• Cash values are not subject to the market risk associated with longer-term municipal bonds and other longer-term fixed income investments
• Regular savings are encouraged as an additional advantage for those saving with a whole life policy
• Favorable tax treatment is a relative matter, depending on changing individual circumstances and investment alternatives
• Life insurance policies can be used as collateral or security for personal loans
  
• Permanent insurance protection for the "whole of life"
  
• Life insurance proceeds are not part of the probate estate if named as the beneficiary of the policy
• Interest accumulated through the investment portion of a policy is tax-free until it is withdrawn

In our next blog post, we will discuss the disadvantages of whole life insurance.