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$250k Whole Life Insurance Policy

$250k whole life insurance policy
Insurance Quotes 2 Day Team

Written By Doug Mitchell

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA.  Doug has spent close to 30 years in the insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health.  Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

Holly Mitchell  &

Holly Mitchell’s background in life insurance insurance goes back to 1985 when she worked for her father who was a New York Life agent. Holly has a marketing degree from Auburn University and has had a life insurance license since 2008. In addition to advising life insurance for customers all around the country, Holly is our website fact checker.

Rob Pinner   &

Rob Pinner is the founder and CEO of Pinner Financial Services servicing all 50 states. Rob started his insurance career in 2002.

Louis LaBash

Results-driven and innovative life insurance professional with 30 plus years of life insurance industry sales and marketing experience. Recognized as a pioneer in the field, leveraging phone and internet channels to exceed personal sales of over $100 million during the first decade of the 21st century. Creator of a highly effective intuitive IUL life insurance sales software that facilitated the sale of millions of dollars of indexed universal policies by numerous life insurance agents. Proven track record as a Managing General Agent (MGA), Life Agent, IUL Life Insurance Sales Software developer, and leading-edge creator of insurance marketing tools, educational content, and delivery systems.

 7 minute read

A $250k whole life Insurance policy can be a great cornerstone for a strong financial plan. Let’s look at a $250k whole life insurance policy and how it compares to a $250k term life insurance policy. 

A $250,000 whole life insurance policy provides a guaranteed death benefit of $250,000 to your beneficiaries for your entire lifetime.  This whole life policy is designed with a dual benefit: a steady death benefit and a cash value that grows guaranteed tax-deferred over time.

A $250k term life insurance policy will only pay the $250,000 death benefit to your beneficiaries if you die during the term period.  Most term life policies range between 10 and 30 years.

 

Suitability and Benefits of a $250k Whole Life Insurance Policy

A $250k whole life insurance policy is particularly beneficial for:

  • Individuals seeking lifelong coverage with guaranteed premium payments.
  • Those interested in concepts like Infinite Banking and Tax-Free Retirement
  • Families or individuals wanting to leave a guaranteed inheritance or financial legacy.
  • People with a desire to have a guaranteed layer of financial security in addition to traditional retirement saving strategies.

Understanding the Whole Life Insurance Premium Structure

Whole life insurance premiums will be higher than those of term life insurance, but they will be guaranteed to never increase because of age or a change in your health.  Part of the premium contributes to the death benefit, while the other part builds the cash value.

Cash Value: A Key Feature of a $250k Whole Life Insurance Policy

The cash value of a $250K whole life insurance policy grows at a guaranteed rate set by the insurer. Policyholders can use this cash value as loan collateral or withdraw a portion under certain conditions. This feature provides financial flexibility, allowing the policy to serve multiple purposes throughout your life.  In addition to the base insurance premium, whole-life policies allow for additional cash to be funded into the paid-up additions rider, helping to grow the cash value even more.

Whole Life for Long-Term Financial Planning  

Whole life insurance, especially a policy with a substantial coverage amount like $250,000, can be a crucial part of your long-term financial strategy. It can help in estate planning, wealth transfer, and even as a retirement funding source due to its cash value accumulation and borrowing options.  Many of our clients purchase whole life insurance from a mutual life insurance company with a strong dividend-paying history.

Suitability and Benefits of a $250k Term Life Policy

A $250k term life insurance policy is more suited for:

  • Young families seeking cheap life insurance protection.
  • Individuals with significant debts, like a mortgage.
  • Those who require a substantial coverage amount but have a limited budget for premiums.
  • Individuals looking for temporary coverage for key financial responsibilities like a 30-year mortgage or income replacement.

Choosing the Right Term Length

The term length for a $250K policy typically ranges from 10 to 30 years. Selecting the right term involves considering your current age, financial responsibilities, and the age of your kids. For instance, a 30-year term might be ideal for a new parent, while a 10-year term might be more affordable for someone nearing retirement.

The Affordability Factor

One of the most appealing aspects of a $250K term life insurance policy is its affordability. The premiums will be lower compared to whole life insurance, making it an ideal option for most budgets. The cost, however, will vary based on factors like age, health, lifestyle, and the term length chosen.

$250k Whole Life Insurance Policy Rates vs $250k Term Life Insurance Policy Rates?

Here is where the sticker shock comes in.  When comparing the costs of a whole life policy to a term policy, the term will always be the cheapest option.  The reason whole life insurance costs more than term is because it is permanent and builds cash value.  The cash value can be used as your own bank.  The cash value in your whole life policy can be used as collateral to borrow funds from the life insurance company.  While you have borrowed funds from the insurance company, your cash value continues to grow on a guaranteed basis and has the opportunity to receive dividends.

 

$250k Life Insurance Policy Rates
  Term Life Rates Whole Life Rates Term Life Cash Value at age 65 Term Life Insurance remaining at age 65 Whole Life Cash Value at age 65 Whole Life Insurance remaining at age 65
Age 25 $21.00 $278.00 $0.00 $0.00 $278,000.00 $290,000.00
Age 35 $24.00 $361.00 $0.00 $0.00 $201,000.00 $347,000.00
Age 45 $50.00 $514.00 $0.00 $250,000.00 $144,000.00 $412,000.00
Age 55 $141.00 $781.00 $0.00 $250,000.00 $78,000.00 $525,000.00

 

As shown in the table above, term life insurance is the most affordable way to purchase a $250k life insurance policy. The proper mix of whole life insurance and term life insurance will be beneficial for most people when mapping out a financial strategy. 

How Are Rates For a $250k Life Insurance Policy Determined?

 There are three primary items that will affect your rate no matter which type of life insurance you purchase:

  1. Your age when you purchase the policy
  2. Your health when you purchase the policy
  3. The face amount (death benefit) of the policy you purchase

Based on this, it makes better financial sense to purchase life insurance when you are younger and healthier instead of waiting. Your life insurance rates will never be as cheap as they are when you are young.  If you choose to buy a $250k whole life insurance policy, your rates are locked in forever, and your cash value has more time to grow.

Optional Riders for $250k Life Insurance Policies

Most life insurance companies offer a handful of optional riders that you can add to your $250,000 life insurance policy to expand your coverage and add living benefits. Some of these riders can make a huge difference when life events happen that could be financially devastating.

Accelerated Death Benefit

This is one of the most important riders to consider, and in fact, many insurance companies include this benefit in the core coverage of the policy. The accelerated death benefit provides for the insurer to advance the insured a large percentage of the death benefit if he or she is diagnosed with a chronic or critical illness. The advance you receive is intended to help with expensive medical costs and other life-ending expenses while you are still alive.

Accidental Death Benefit

This rider provides for the insurance company to pay an additional amount that you select over and above the policy face amount if your death is the result of a covered accident. The cost of this additional insurance is very inexpensive and should always be considered.

Children’s Term Rider

The children’s term rider allows the applicant to add and insure all dependent children on the policy, including any children born after the policy is issued. The children’s coverage will expire between the ages of 18 to 25. These riders are usually convertible to a whole life insurance policy up to 5 times the original amount.

Waiver of Premium

When you select this rider, your insurance company will waive your life insurance premiums if you become totally disabled and are unable to work.

Return of Premium

The return of premium rider provides for the insurance company to return all premiums paid to the company if the insured outlives the policy term. Since the premium being returned has already been taxed, the insured will receive this lump sum payment tax-free.  One of the best companies for Return of Premium term is Assurity Life.

Conversion Rider

The conversion rider is another benefit that many companies include in the policy’s core coverage. The conversion rider allows the policyholder to convert their term policy to a permanent policy and receive the same rate class as the term policy without having to prove insurability or undergo a medical exam. Many companies will also include a premium credit towards the new policy.

Final Thoughts on a $250k Whole Life or Term Life Insurance Policy

The easiest way to start your $250k life insurance policy is to use the life insurance calculator on the side of this page.  You will have a better understanding on price and the companies that are available for you to purchase from.  We can also help guide you when you call us at 1-800-712-8519.

 

Frequently Asked Questions about $250k Life Insurance Policies

What factors influence the cost of a $250k life insurance policy?
The cost of a $250k life insurance policy varies based on several factors, including the policyholder’s age, health, lifestyle habits (like smoking or high-risk activities), the type of policy (term or whole life), and the term length for term policies. Younger, healthier individuals will pay lower premiums, while higher risk factors can increase the cost.
 
Who should consider a $250k life insurance policy?
A $250k life insurance policy is well-suited for individuals with moderate financial responsibilities, such as young families, homeowners with mortgages, or those looking for a balance between adequate coverage and affordable premiums. It’s an excellent choice for those who want to ensure their family’s financial security without overextending their budget.
Can I convert my $250k term life insurance policy into a $250k whole life insurance policy?
Many insurance providers offer the option to convert a term life policy to a whole life insurance policy. This feature allows you to switch to permanent coverage without new medical underwriting. The specifics depend on your policy’s terms and conditions, so it’s important to check with your insurance provider for details.
Is a medical exam always required for a $250k life insurance policy?
Whether a medical exam is required depends on the insurance provider and the policy type. Many insurers require a medical exam for a $250k policy to assess risk, but some companies offer no-exam policies.
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Doug Mitchell

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