Whole Life Insurance

Whole life insurance provides you a permanent coverage throughout your life and allows you to pay timely premiums. With easily affordable premiums and accumulated cash value, whole life insurance is an attractive alternative for meeting long-term goals of most people. Guaranteed cash value ensures that you will have a cash reserve in times of dire needs such as medical emergencies. A percentage of premiums of your whole life insurance policy meet the company’s administrative and other expenses. The remaining portion is either invested or contributes to cash value of your policy. Whole life insurance companies do not make payments in case of death only. The most important advantage of whole life insurance policy is that the policyholder can utilize cash value of before his death. Your policy’s cash value can be received either in the form of policy loan or the policy can be cashed out. Interest and dividends accumulated by investing premiums of whole life insurance policy are tax free till the time they are cashed. Cash value of your whole life insurance policy can also be utilized to pay premiums to continue current insurance protection. Another advantage of the whole life insurance policy is its fixed premiums. Premiums of a whole life insurance policy remain the same irrespective of health conditions and age.

This makes it more attractive to buy whole life insurance at an early stage when you have sound health to ensure paying low premiums. This will ensure significant accumulated cash value that will be received on retirement or as per the wishes of the policyholder.

Banks readily accept whole life insurance policies as security against mortgage loans and credit lines etc. if sufficient capital has been accumulated. An important advantage of choosing a whole life insurance policy over other types of life insurance policies is that the term life insurance component of premiums contributes to cash value of the policy that can be either cashed out or be used to pay premiums for the coming years. As mentioned above, premiums of a whole life insurance policy remain constant during the life of the policy. Unless the whole life insurance policy is changed you have life long coverage with no medical checkups. Whole life insurance also helps saves taxes. Despite the fact that whole life insurance policy helps accumulate tax savings are rates of return to policyholders is very low. Most professionals do not recommend using whole life insurance policy as an independent investment.

Whole life insurance policy pays your beneficiaries a lump sum amount at death. However in some cases where critical illness is diagnosed it may also be used for paying medical expenses. Payout may differ from fixed sum to the one dependent on investment performance depending on what is left after mortality costs and other expenses deduction. Premiums may be paid in a single, fixed periodic or variable periodic payment that is reviewed subject to investment performance and change in mortality costs. Some whole life insurance policies allow a range of flexible options resulting in maximum payout over a fixed period. After this period (that is usually earlier in your life), when the policyholder has grown older, the cover can be continued for increased premium or the cover can be reduced altogether. These policies are especially useful for people who want increased cover while having dependent children when their children have become more independent. The basic reason for choosing such a policy over a term policy and waiting until later to replace it with whole life insurance is that the policyholder is underwritten for life and may not be protected in the future they be diagnosed with a serious illness such as cancer.