subject: What Is Whole Life Insurance? [print this page] Whole life insurance is a type of permanent insurance policy. It is called that because, as long as you pay your insurance premiums, the policy is yours for life. This provides your loved ones with security upon your death.
When you purchase a whole life policy, you decide what amount you want the policy to be. It is usually in increments of $1000 and should be an amount that will cover your burial needs, cover the debts that you have and include an amount that you want your loved ones to inherit.
The amount that you pay for the policy is based on your health, the amount of the policy and sometimes your credit score. Your policy will remain the same amount the whole time that you have it. However, some of the money that is paid on the premium is invested for you. The return on the investment is yours to withdraw while you have the policy or if you should ever decide to cancel the policy.
Whole life policies can be more expensive than other policies so it would be a wise choice to purchase when you are young. It is also wise because usually younger means healthier. They are wise choices to buy because they do not expire and never have to be reapplied for. When someone becomes older and their health deteriorates, they don't have to worry about denied for insurance.
There are many variations to whole life policies which are as follows:
A traditional policy gives you a guaranteed death benefit and a guaranteed amount of cash accumulation over a period of time. An insurance agent would be able to outline the specifics of the cash value of the policy.
A variable policy gives you the option of investing the cash value of your policy in investments like stocks. Because stocks are not guaranteed to have a positive return, the cash value of the policy could become a loss instead of a gain.
A single payment policy is generally used for estate planning. This would benefit a person who wanted to avoid paying a lot of estate taxes and have a length probate. This policy is purchased by paying a large, single premium, usually close to the face value of the policy.
Since there are so many different types of whole insurance policies, it is important that you sit down with an experience insurance agent and discuss all of your options.
by: Peter Boucher
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