A whole life insurance policy, as the name suggests, covers the policy owner all his or her life. The premiums and death benefits will remain the same through out the life of this policy. This type policy creates a cash value that can be with drawn or borrowed against.
Various types of whole life
A Whole life insurance policies have been tailored to meet the various needs of every buyer. The various types are Modified, Mutual Single Premium, Universal, Indexed Universal, Variable, Survivor-ship, only to name a few. Insurance companies are very competitive and it is easy to find a whole life insurance comparison by going on-line and completing a quick search. Each persons age, health, wealth, and many more faction go into what type insurance policy you should consider.
The traditional form of whole life insurance offers a minimum rate of return on the cash value portion of the policy and that rate is guaranteed. On the other hand, interest-sensitive whole life insurance provides variable rate on the portion of the cash value, akin to adjustable rate mortgage. Single premium is advisable for policy a person who has acquired a large amount of money, usually over 65 and wants to protect a “nest egg”. This type of whole life insurance policy also offers cash value and shares the same tax shelter on the returns.
Term vs whole life insurance
A person who owns a Term life insurance policy usually hates whole life because it is more expensive and they feel they can invest their money with a higher yield than an insurance company. Term is establishing a set premium amount each year and a fixed amount your beneficiaries will collect and has no cash value nor investment benefits. What you pay in premiums are gone as term insurance is only for your beneficiaries financial security upon your death. If you are in this category, I might suggest that there is a Variable Whole Life policy that might entice you over if you will study the benefits.
One insurance company offers a policy where after several years of cash value accumulation, part of can be coveted to help pay off a person’s entire policy over a shorter period. In addition, the premium will remain the same as long as the policy owner is covered unless he or she opts to change it. Furthermore, policy owners will not be subjected to medical exams in the future. Lastly, aside from these advantages, whole life insurance can provide you some savings on taxes.