Whole Life Explained

Whole life insurance is basically permanent life insurance that covers an individual's entire life. This type of insurance also includes a savings plan so that you can build up cash reserves. To maintain this kind of coverage, an individual must pay a premium every year. Term insurance is similar to life insurance, but there a few differences. You need to keep renewing the term policy to maintain coverage. When the insured person dies, a lump sum is paid to the beneficiary. In contrast, whole life insurance is a never ending policy that lets you make investments on it. This way, you can use your whole life coverage amounts build a nest egg to borrow against.

Premium Payments

Your yearly payment covers both the cost of the insurance policy and a little bit for your savings plan. You can choose the type of premium plan to suit your lifestyle. You can speak to an insurance agent from this website to find out the best rates and type of plan for your family. Ask the agent about the "face value" of the policy, which is the amount paid out to your family upon your death. The face value is different from "cash value," which is the investment amount that accumulates over the years. You can access the cash in your account or borrow against it. If you decide to end your life insurance policy as a senior, you will receive back some or all of your cash value amount.

Whole Life Insurance Cost

Whole life insurance usually costs more than a term policy because you are paying for the term and the investment feature. In the long run, a whole life insurance policy is actually less expensive than a term policy because there are no renewal fees over the course of a lifetime. Many people purchase these policies as a type of sernior retirement plan because they pay a fixed premium each month.

Types of Whole Life

There are two main types of whole life insurance: participating and non-participating. A non-participating policy has fixed costs, but does not offer dividends. A participating whole life policy pays out dividends to its insured in the form of reduced premiums, cash, or savings. Within these two main categories, there are four "subtypes" of whole life insurance: level premium, limited payment, single premium, and indeterminate premium.

Level vs. Limited Premium

Level premium insurance has fixed premium payments that an individual must pay every year until death. At the start of the policy, the insured actually pays extra cash, which is invested by the company. A limited policy is one in which an insured person only pays premiums for a set number of years. These payments are going to be higher than a level insurance policy.

Single vs. Indeterminate Premium

Single premiums are paid off with a single large payment, and the insured is covered for life. This is a good type of plan for someone who wants high investment dividends. In contrast, indeterminate premiums change from year to year based on several factors. This works out well for someone who wants to pay a very fair premium and does not mind if his premium payment changes every year.

Whole Insurance Decisions

Life insurance is a huge benefit if you have dependents. You want to make sure your family is taken care of no matter what happens in life. You don't have to be a wealthy person to purchase whole life insurance because there are plans for every budget. Contact an insurance agent affiliated with this website to find out how you can get quotes and start to compare policies today