Analysts in the insurance industry state that whole life insurance is the best way to meet the permanent needs of a person. This type of policy gives maximum coverage by building "cash value" as long as the policy holder is paying the premiums on time. Although this policy is expensive compared to term life insurance, the benefits associated with it are significantly more than the term life insurance.
The prime advantage of this policy is that it utilizes a policyholder's investment in such a way that he or she can reap the maximum benefit from the investment made in form of premium. Whole life insurance policy consists of a life insurance policy and an investment fund. The premium paid by a person is divided between the investment fund and the policy. Thus, a policy holder will get medical coverage and also earn interest from the investment.
Numerous advantages are associated with whole life insurance policies.
One of the unique features of whole life insurance policies is that they allow you to fund an insurance trust. Such a fund covers inheritance tax and probate fees that heirs of large estates incur.
This type of policy comes with a guarantee of stable premium amount throughout the life of the policy. This clause remains unchanged for those who suffer from chronic heart diseases or other kind of physical problems. Even when a policyholder becomes terminally ill, he or she will not be required to pay increased premium.
The biggest advantage is the facility of borrowing money against a whole life insurance policy. This feature would come handy for policyholders who may come across an urgent requirement for cash. In case an insured person is unable to continue the policy, he or she has the option of surrendering the policy to the insurer at its current cash value.
Types of whole life insurance policies
Single premium policy requires a large premium payment at the beginning of the policy. After this payment, a policyholder is not required to make further premium payments.
Intermediate premium comes with the option of adjustable premium payments.
Limited payment plans offer lifetime coverage through small premium payments for a fixed number of years.
One can also receive dividends by purchasing Participating whole life insurance policy.