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Whole Life Insurance

Unlike a term life insurance policy which only covers you for a specific period, whole life insurance covers you for your entire lifetime. In most cases, your monthly premium and your death benefit will not change, and whole life insurance policies build cash value that you can borrow against. The cash value of the policy is tax-deferred until it's withdrawn. This guide will tell you a little more about whole life insurance and why it may be the right choice for you.

Just as is the case with other insurance types, whole life insurance comes with a variety of choices. The most common options in whole life coverage include single-premium, traditional, and interest-sensitive policies. Single-premium policies build cash value, and returns are under a tax shelter. Interest-sensitive policies bring greater flexibility in raising the death benefit without the corresponding increase in premium, and the rate on your policy's cash value can rise and fall as well. The most stable option is a traditional policy, which offers a guaranteed return rate on the cash value.

There are a few benefits of choosing whole life insurance over another type of life insurance policy. With whole life, a part of the premium you pay is put toward your policy's cash value, which could end up paying for your policy value after a few short years. Your premium will not change, unless you want it to; and you won't have to take any further medical exams unless you want to make major changes to your policy. The tax savings we mentioned earlier also serve to make whole life insurance a good choice for a lot of people.

Although these policies provide cash value, the rate of return on them is fairly low when compared with other investment types (even when the aforementioned tax savings are counted). Most investment experts believe that people should not rely on life insurance as an investment vehicle, and that policy choice should be made based on the amount of protection offered, not the policy's rate of return.

Whole life insurance, as its name implies is permanent protection for your business and your family, to safeguard them from the unexpected. The important elements in your life will be protected from the time you purchase the policy until the day you die, as long as you pay your premiums on time. Whole life insurance provides a stable foundation upon which a person can set their long-term financial goals.