To begin with, you need to understand that life insurance falls
into two very broad categories: Whole and term. The basic
difference between term and whole life insurance is this: A term
policy is life coverage only. In whole life insurance policy, as
long as one continues to pay the premiums, the policy does not
expire for a lifetime. As the term applies, whole life insurance
provides coverage for the whole life or until the person reaches
the age of 100. Whole life insurance policies build up a cash
value (usually beginning after the first year). With whole life,
you pay a fixed premium for life instead of the increasing
premiums found on renewable term life insurance policies. In
addition, whole life insurance has a cash value feature that is
guaranteed. In term and whole-life, the full premium must be
paid to keep the insurance.
With level premiums and the accumulation of cash values, whole
life insurance is a good choice for long-range goals. Besides
permanent lifetime insurance protection, Whole Life Insurance
features a savings element that allows you to build cash value
on a tax-deferred basis. The policyholder can cancel or
surrender the whole life insurance policy at any time and
receive the cash value. Some whole life insurance policies may
generate cash values greater than the guaranteed amount,
depending on interest crediting rates and how the market
performs. The cash values of whole life insurance policies may
be affected by a life insurance company's future performance.
Unlike whole life insurance policies, which have guaranteed cash
values, the cash values of variable life insurance policies are
not guaranteed. You have the right to borrow against the cash
value of your whole life insurance policy on a loan basis.
Supporters of whole life insurance say the cash value of a life
insurance policy should compete well with other fixed income
investments.
Unlike term life policies, whole life insurance provides a
minimum guaranteed benefit at a premium that never changes. One
of the most valuable benefits of a participating whole life
insurance policy is the opportunity to earn dividends. The
insurance company based on the overall return on its investments
sets earnings on a whole life policy. In addition, while the
interest paid on universal life insurance is often adjusted
monthly, interest on a whole life policy is adjusted annually.
Like many insurance products, whole life insurance has many
policy options.
Make sure you can budget for whole life insurance for the long
term and do not buy whole life insurance unless you can afford
it. You should buy all the coverage you need now while you are
younger, and if you cannot afford whole life insurance, at least
get Term. That is why whole life insurance policies have the
highest premiums it is insurance for your whole life, no matter
when you pass on. The level premium and fixed death benefit make
whole life insurance very attractive to some. Unlike some other
types of permanent insurance, with whole life insurance, you may
not decrease your premium payments.
For more information about whole life insurance, visit
http://www.wholelifeinsuranceinfoguide.com and
http://www.terminsuranceinfo.com
About the author:
David Chandler For your FREE Stock Market Trading Mini Course:
"What The Wall Street Hot Shots Won't Tell You!" go to:
http://www.stockmarketgenie.com
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