In this video Chris Kirkpatrick does the 2023 update to his How To Properly Structure A Whole Life Insurance Policy. These videos …
When it comes to financial planning, having a solid life insurance policy in place is crucial. One popular option that many individuals opt for is whole life insurance. Whole life insurance provides coverage for the insured’s entire life and also includes a cash value component that grows over time. However, in order to make the most out of a whole life insurance policy, it is important to properly structure it. In this article, we will discuss how to properly structure a whole life insurance policy in 2023.
1. Determine Your Coverage Needs: The first step in structuring a whole life insurance policy is to determine how much coverage you need. This will depend on your financial obligations, such as mortgage payments, debt, and future expenses. A good rule of thumb is to have a coverage amount that is at least 10 times your annual income.
2. Choose a Reputable Insurance Company: When selecting a whole life insurance policy, it is important to choose a reputable insurance company. Look for companies with strong financial ratings and a track record of paying out claims. You can research companies online or consult with a financial advisor for recommendations.
3. Decide on the Premium Payment Structure: Whole life insurance policies have fixed premiums that can be paid on a monthly, quarterly, or annual basis. You can also choose to pay the premiums for a limited number of years, or for your entire life. Discuss your premium payment options with your insurance agent to determine the best structure for your financial situation.
4. Select Riders to Enhance Your Policy: Whole life insurance policies often come with optional riders that can enhance your coverage. Common riders include a waiver of premium rider, which waives your premiums if you become disabled, and an accelerated death benefit rider, which allows you to access a portion of your death benefit if you are diagnosed with a terminal illness. Consider adding riders that align with your needs and goals.
5. Pay Attention to the Cash Value Component: One of the key features of whole life insurance is the cash value component, which grows over time. It is important to pay attention to how the cash value is structured in your policy. Some policies offer guaranteed cash value growth, while others have a variable component that is tied to the performance of the insurance company’s investment portfolio. Discuss your options with your insurance agent to determine the best cash value structure for your needs.
6. Review Your Policy Regularly: Life circumstances change over time, so it is important to review your whole life insurance policy regularly. Consider reviewing your policy every few years or whenever you experience a major life event, such as getting married, having children, or changing jobs. This will ensure that your coverage remains aligned with your current needs.
In conclusion, structuring a whole life insurance policy in 2023 requires careful consideration of your coverage needs, premium payment structure, riders, cash value component, and ongoing review. By following these steps and working with a knowledgeable insurance agent, you can ensure that your whole life insurance policy provides the financial protection you need for the long term.