Whole Life Insurance Explained

Whole Life Insurance Explained
In short, whole life insurance is basically a permanent life insurance policy that covers you until the day you die. The only catch is that you have to make your premium payments on time each month until you die to keep the policy in effect. 

Whole life insurance policies are different than other policies in that you can borrow money from the cash value you have built up over the years within the policy.

As such, some people have been able to find their way out of financial emergencies with the monies available in their whole-term life insurance policy.

Advantages Of Whole Life Insurance:

Whole Life Insurance Policies Have Guaranteed Cash Values

A portion of your premium payments is invested in such a way that you can enjoy a guaranteed cash value. If you ever decide to get rid of your whole life insurance policy, you will often get a "cash surrender value" depending upon the amount of money in the policy and if you have borrowed against it recently.

Whole Life Insurance Policies are Tax-Free

The growth in a whole life insurance policy is currently tax-free. That means you can build it up through your premium payments without paying taxes on the growth.

Whole Life Insurance Policies Can Earn Dividends

When an insurance company charges you more for your whole life premiums than the company's actual costs for the policy, they sometimes return the difference to you in the form of dividends. 

It's difficult for a company to predict its actual costs in advance, so these returns are not guaranteed. Dividends are just a nice feature because it's like unexpected money.

Whole life insurance is a great way to make sure your affairs are tended to after you pass away. But it's also an ideal way to have access to the money you have built up in the policy while you're still alive. Compare the different companies and find a whole life insurance policy that's right for you.

Types of Whole Life Policies

As you can see the above defines many benefits for whole life insurance. There are generally eight different types of whole life insurance policies. They are participating, non-participating, indeterminate premium, limited pay, economic, single premium, and interest sensitive. 

Most companies only offer a few of the different types of whole policies and there are even companies that offer different types that are not listed here. The type of whole-life policy you choose will be based on the insurance company you choose, your budget, and your insurance needs as each one has its own specific offerings and regulations.

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