Brief History of Life Insurance
The origins of the concept of life insurance, as we know it, can be traced to ancient Rome. Caius Marius, a Roman military leader, created a burial club among his troops. When an unexpected death occurred the other members paid for the funeral expenses.
The Presbyterian Ministers' Fund, established in 1759, was the first life insurance entity in the United States. Its initial purpose was to provide life insurance to widows and orphans of diseased ministers
The National Insurance Convention was founded in in 1871, which later became the National Association of Insurance Commissioners we know today, and regulations regarding life insurance were put in place. Shortly thereafter, new legislation led to more positive change. Women became empowered to lawfully purchase their own life insurance policies, as well as to receive their rightful proceeds when listed as beneficiaries.
These changes were fundamental for industry expansion — and making life insurance accessible to all who needed it.
Whole Life Insurance
Whole life insurance, is the original life insurance and is often referred to as “permanent insurance,” is the most straightforward option. Whole Life Insurance policies have a level premium, they accumulate a guaranteed amount of cash value each year, and the death benefit is also guaranteed as long as you live. The death benefit is also paid out to your beneficiary tax free.
As a result of the guarantees, whole life typically has a higher premium cost to the policy owner.
Cash Value- The mortgage analogy
A whole life policy is very similar to how your home mortgage works. When you purchase a home, with a mortgage, you commit to a monthly payment. Think of the mortgage payment as your insurance premium. In the beginning, the premiums seem very costly because you are paying down mostly interest on the loan.
The same will hold with your whole life policy. In the early years, you will be paying your premiums, and there will seem to be very little in your cash value savings account. But, just like a mortgage, with time you see equity grow in your home, you will see the cash value grow within your policy.
Whole life has one big upside compared to your mortgage; you have asset protection in the way of your death benefit!
5 Common Whole Life Insurance Myths
1. The policy will just eat it's self and not be worth anything when I need it!
Traditional Whole Life Policies do not do this. You have a guaranteed premium and a guaranteed death benefit (face value) that will be paid out to your beneficiary.
2. Whole Life Policies are too expensive, I can't afford it.
There are policies for every budget. Use an agent that is a broker to shop for you. It is their job to find you the best policy at the best rate.
3. You have to be in really good health to get a whole life policy, I have (insert disease here) so I can't get it, even if I wanted it.
Use that agent again, there are whole life policies out there for every health condition. In some states there are policies for every condition and every age from 0-85.
4. It takes too long to take out a policy. I don't have time for that. I don't want someone in my home either.
Most policies can be completed in less than 15-20 minutes and many companies offer applications that can be completed entirely over the phone. A broker agent can help you get exactly what you need and can do business the way you want to!
5. Whole life insurance pays out only when the insured person dies.
We often think of a life insurance payout as the money the insurance company sends after the insured person dies. But sometimes you can access the money before death. A whole life insurance policy that includes “accelerated benefits” allows the policy owner to take all or some of the payout, called the death benefit, if the insured person becomes terminally ill. A similar feature called a chronic illness rider lets the policy owner access the life insurance money early if the insured person develops a serious chronic illness or condition. When the insured person dies, the money that was withdrawn early is deducted from the final payment to beneficiaries. Accelerated benefits and chronic illness riders usually are available at no charge or for a small fee.
Work with an agent
As with all life insurance questions and when taking out a policy work with a broker agent. They can give you expert advice and it is their job to find you the best policy, at the best price. The agents at Life Plans+ are all broker agents and are here to help you and your family!
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