A whole life insurance is a type of permanent life insurance, which means the insured person is covered for the duration of their lives as long as premiums are paid on time. There are much difference between a permanent life insurance and a term life insurance, where by the insured individual is covered for a set amount of time (this occurs within 10 – 30 years).
A whole life insurance is one of the most common type of permanent life insurance policy where by people purchase base on the insurance information institute (III).
In the whole life insurance, a savings component called “cash value” is offered.
What are the benefits of whole life insurance?
There are certain aspects of whole life insurance that can make it an appealing choice.
- One of the benefits of a whole life insurance is that your premiums are fixed and will never go up, regardless of the market situation.
- Another benefit is that there is guarantee on your death benefit as you make the required premium payment.
- Another important benefit of a whole life insurance is that you are allowed to withdraw funds or take out loan.
Whole life insurance provides fixed premiums and fixed death benefits
Death benefit and premium are usually constant in most case, they stay for the duration of a whole life insurance policy, says the III. An offer by the universal life institute provides option to adjust your premiums or death benefit over time.
However, whole life insurance provides you with a fixed premiums and fixed death benefits, there is no need to get worried about increased premiums as you advance in age. Your love ones will also have idea on how much to expect from the company when your life insurance benefit is paid after you pass away.
Whole life builds cash value
A whole life policy can serve as a source of emergency funds for you if some happens, or you can acquire for loan against the policy. This happens when a portion of each premium payment you make is funneled into a saving component of the policy which is known as the “cash value”.
With time the cash value of your policy tends to increase, and you may be given the chance to place for withdrawal of funds or borrow against it. The role of how and when to do this taxes changes by the company and policy. A guideline maybe offered by your insurer to follow so that you don’t inadvertently reduce the policy’s death benefit.
How much does a whole life insurance cost?
The cost of a whole life insurance depends on different factors, this include how much coverage you buy and others.
You will typically be able to make a fixed annual payment for a whole life insurance policy when it comes in paying your premiums. Other life insurance companies do offer for monthly payment, quarterly and twice a year. However, payment of premiums more frequently instead of once per year may incur additional charges.