Whole life insurance acts vas a cushion to not only your dependants but loved ones as well
, in case of an untimely death on your side. This is the type which covers you for your entire life besides also being the one which your premium payment portions are added towards your policys cash value. There are basically three types of whole life insurance policies from which to choose. The first one is the traditional type, which guarantees you a return rate that is minimum based on the policys cash value. If you are holder of this policy and happen to be a first time home owner, then you are at an advantage in the sense that you are allowed cash withdrawals as down payment for the house.
The other type of life insurance is one which is referred to as interest sensitive and it is the type in which the cash value acquires a variable interest rate. There is the advantage here of changing your death benefit amount, something that happens without an increase in the amount of premium paid. Though quite enticing, there is some level of risk involved in regard to your cash value. This is due to the fact that it is subject to the prevailing economic conditions in the sense that if they are poor then the cash value is bound to greatly suffer.
The single premium is the third type of whole life insurance, and this one is usually a premium payment that is made in lump sum upfront. In other words, you are not required to make any further premium payments soon after you have made the first one. The cash value here grows over the time depending on the policys set interest rate. There are many benefits associated with whole life insurance among them being the fact that the policy in itself acts as a tax shelter since no tax is deducted from the cash value in the policys entire life time.
Though the interest rate might be small, it is important to view this policy as an investment rather than viewing it as the main asset. Another benefit associated with this kind of insurance policy is that the premium amount remains constant for the entire policy life. you cannot also change the death benefit amount until it has been a policy that is interest sensitive. Your current expenses and assets are the ones determining the amount of whole life insurance policy that you need.