Whole life insurance, also known as "whole of life" insurance or "straight life," can be defined as a life insurance plan that is secured by an investment that pays out a death benefit to beneficiaries upon the policyholder's death. Unlike other forms of life insurance, whole life insurance is tax-free and considered very safe and dependable. With whole life insurance, the death benefit is a percentage of the policyholder's whole life insurance savings at the time of death, with amounts increasing with the age of the holder. Policyholders may borrow against their death benefit, but the premium payment they must pay out each month is generally deducted from any interest or dividend income they receive. Policyholders may borrow against their premiums as well, but the borrowing amount is subject to the insurance provider's terms. Most insurance providers offer policies in several different sizes, all of which come with different coverage options and premiums.
In addition to the whole life insurance savings program, another type of whole life insurance product is a guaranteed annuity. With this product, the insurer guarantees a fixed interest rate and charges a minimum rate on the cash value portion that is left behind. The insurance provider then pays the interest rate, without regard to the direction of the market, until the remaining balance of the loan has been repaid. In certain circumstances, it may also be possible to borrow against the cash value portion of the annuity, but this option is not available to policyholders with negative cash values. Policyholders are rarely able to choose the interest rate they wish to pay, and if the interest rate on the loan is higher than the guaranteed annuity guarantee, the excess funds will be paid to the insurer in a lump sum.
Many people with whole life insurance policies are protected in the face of unforeseeable emergencies, but they don't have the option of withdrawing from the policy or cashing out before the death benefit expires. A policyholder can change their premiums at any time. In fact, they can change their death benefits as well. This gives policyholders an opportunity to plan for unexpected expenses and live in peace of mind. Although the premiums may increase over the course of a lifetime, whole life insurance policies provide the most security during the term of the policy.
There are two basic types of whole life insurance policies-
Permanent whole life insurance policies - are set in place at the time of the initial coverage. Premiums will never decrease with age, but the face value of the policy may decrease over time as the premium continues to grow. These policies are ideal for people who do not anticipate decreasing the premiums for decades, as is the case with variable whole life insurance policies. If the insured person lives past the "term" of the policy, they will receive no benefit.
People who purchase term life insurance to do so to provide a death benefit that will cover funeral costs and leave a lump sum to their heirs. Although whole life insurance policies offer no flexibility regarding the death benefit, many people choose to include a variable premium payment in their permanent policies so that they have some control over how their money is used. Most whole life insurance policies offer fixed premiums throughout the life of the policy. However, many people choose to purchase a combination of fixed and variable premium plans in order to maximize the return on their investment. Whole life insurance policies are a popular choice among people who have a large number of family members, as the death benefit often covers the expenses of the entire estate, while the payments of variable plans are usually enough to cover most of the deceased's expenses.
In addition to the whole life insurance savings program, another type of whole life insurance product is a guaranteed annuity. With this product, the insurer guarantees a fixed interest rate and charges a minimum rate on the cash value portion that is left behind. The insurance provider then pays the interest rate, without regard to the direction of the market, until the remaining balance of the loan has been repaid. In certain circumstances, it may also be possible to borrow against the cash value portion of the annuity, but this option is not available to policyholders with negative cash values. Policyholders are rarely able to choose the interest rate they wish to pay, and if the interest rate on the loan is higher than the guaranteed annuity guarantee, the excess funds will be paid to the insurer in a lump sum.
Many people with whole life insurance policies are protected in the face of unforeseeable emergencies, but they don't have the option of withdrawing from the policy or cashing out before the death benefit expires. A policyholder can change their premiums at any time. In fact, they can change their death benefits as well. This gives policyholders an opportunity to plan for unexpected expenses and live in peace of mind. Although the premiums may increase over the course of a lifetime, whole life insurance policies provide the most security during the term of the policy.
There are two basic types of whole life insurance policies-
- The variable insurance policies
- The permanent life insurance policies.
Permanent whole life insurance policies - are set in place at the time of the initial coverage. Premiums will never decrease with age, but the face value of the policy may decrease over time as the premium continues to grow. These policies are ideal for people who do not anticipate decreasing the premiums for decades, as is the case with variable whole life insurance policies. If the insured person lives past the "term" of the policy, they will receive no benefit.
People who purchase term life insurance to do so to provide a death benefit that will cover funeral costs and leave a lump sum to their heirs. Although whole life insurance policies offer no flexibility regarding the death benefit, many people choose to include a variable premium payment in their permanent policies so that they have some control over how their money is used. Most whole life insurance policies offer fixed premiums throughout the life of the policy. However, many people choose to purchase a combination of fixed and variable premium plans in order to maximize the return on their investment. Whole life insurance policies are a popular choice among people who have a large number of family members, as the death benefit often covers the expenses of the entire estate, while the payments of variable plans are usually enough to cover most of the deceased's expenses.
