This is my pick!
20 Pay Whole Life Insurance is one of the best insurance products available to you. It is my absolute favourite and I use this product for my own family’s protection. If it is within your means you should probably have at least a small portion of 20 Pay Whole Life coverage. Let me give you a quick explanation about the 20 Pay product and then give you the advantages and disadvantages, although there aren’t many disadvantages to this product.
20 Pay is a permanent solution to life insurance so you will have it for the rest of your life but, as the name suggests you will make the same monthly payment for 20 years and that’s it! Just as an example, let’s say you took out a 20 Pay policy with a death benefit of 250,000 and the monthly premium payment was $100; you would pay that $100 every month for the next 20 years and at the end of the 20 years you would be paid up in full. You’re covered or insured automatically from the day you get approved but you stop making that $100 payment after 20 years and the $250,000 death benefit will stick with you for the rest of your life.
That’s the biggest advantage to this product and the reason why people love 20-pay insurance so much. No one wants to pay insurance forever! Most people want to have that permanent insurance and they want to own it as soon as possible. You don’t want to worry about making payments for the rest of your life and with 20 Pay you don’t have to.
The 20-pay also has another great advantage. It has, what I like to call, a no-lose clause. It’s actually called a Guaranteed Cash Value and it simply means that your cash value is guaranteed! So at the end of a specified period of time, usually 20 years, you can cancel your insurance and recoup all the premiums you paid into the policy.
I would strongly dissuade you from ever canceling your policy but if you ever fell on some hard financial times, you do have the option. If you compare this with a term policy, you could pay premiums for 20 years and if you ever had to cancel your Term insurance you would get nothing back. Unfortunately this happens all too often with Term products because of their very expensive renewal rates.
Getting back to 20-Pay Insurance, if you had to cancel your policy and, unfortunately this can happen in the worst of times, you did not waste any money and you were actually insured for free for the previous 20 years. A no lose situation!
Yet another wonderful option with the 20-Pay Insurance is that you can borrow money from it and do with it what you please! Most any bank will provide you with a collateral loan for the amount of the Cash Value or maybe even more. All you have to do is show them your paid up policy and you may have to pay a bit of interest on your loan however, you don’t have to worry about paying it back because the borrowed amount will just be deducted from your policy’s death benefit.
In short, the advantages of the 20-Pay are as follows.
- Policy is paid up in full after 20 years.
- A Guaranteed Cash Value.
- Borrowing facility.