Whole Life Insurance

Written by Amy Hall
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Whole life insurance is a great type of life insurance plan if you are looking for permanent coverage. When you purchase a whole life policy, you are covered under the terms of that policy for your entire lifetime. Whole life insurance can cover needs that are not likely to go away, such as the costs of estate settlements and taxes.

In most cases, the premiums for a whole life insurance policy will remain the same for the duration of the policyholder's life. However, the premiums can be much higher during the initial years of the policy in comparison to term life insurance. The result of this fact is that whole life insurance builds cash values over time, whereas term life insurance policies do not.

The Ins and Outs of Whole Life Insurance

A policyholder of a whole life insurance plan can access this cash through surrenders or policy loans. The cash value in a whole life insurance policy includes two components: a guaranteed cash value and non-guaranteed cash value element. With the guaranteed cash value, cash essentially grows based on a pre-determined schedule during the life of the policy. This cash value equals the death benefit upon maturity of the policy, typically when the policyholder reaches the age of 100.

The non-guaranteed cash value element makes up the dividends or excess interest, which further adds to the value of the policy over time. Whole life insurance is great if you are looking for a plan that will cover you for life. In addition, if you do not want to deal with worrying about getting a new plan after a term policy expires, whole life will suit you.


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