Whole Life Insurance

Whole Life Insurance is a permanent type of life insurance in that when a person purchases this type of whole policy, the premium is based on cost factors and underwriting requirements for the age and health condition of the applicant. The policy is issued with the company being obligated to keep it in force until the death of the insured. The amount and duration of premium payments are the same for as long as the insured is alive, but a whole life policy that allow you to pay premiums in a single installment, or for a shorter period such as 20 years or until age 65. Premiums for those policies are higher since the premium payments are made during a shorter period.

Since younger people may need more protection than they could afford in permanent life insurance, many companies offer term insurance as a rider to a whole life policy which makes it possible to increase the total amount of death benefit protection to a sufficient amount at an affordable cost.

An important characteristic of whole life insurance is that it builds cash value over time. Not only does the insured have the death benefit for the beneficiary, the cash value life “savings” is available for use whenever the need arises. The cash value life insurance funds can be accessed by making a policy loan at an interest rate stipulated in the policy. The loan can be repaid or left until death at which time the loan plus accumulated interest would be deducted from the proceeds of the death benefit.

Whole Life Insurance has been around from the beginning, and was the main type of permanent life insurance until the 1980’s. Other types of permanent life insurance policies have been introduced, but whole life is still the most popular.

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senior market advisor Article added 08/16/2011  by Amber Douglas
Senior Market Advisor: Morgan White Group

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