Whole Life Insurance Basics and Information

A whole life insurance policy combines a term life insurance policy, one that provides coverage for a set period of time, with an investment component. In this way, the policy builds cash value against which you can invest. Whole life insurance policies are generally much more expansive than term policies, with the difference being that whole policies attempt to turn the additional money into growing investments.

While term life insurance may be pursued if one wants death protection only for a certain period of time, whole policies are directed toward those whose insurance needs are permanent. Although premiums on whole life insurance policies are initially high, they may eventually be less expensive than premiums on a term life insurance policy that is continually renewed. Whole policies are also pursued by those who can comfortably afford the premiums and want to fit the policy into their retirement or estate planning.

Whereas premium payments in a term life policy may slowly increase, whole life insurance premiums generally stay at a fixed level. This makes a whole life insurance policy easier to plan for in a long term financial plan. As you hold your whole life insurance policy, it will slowly accrue cash value that can go toward the premiums. It can also be withdrawn throughout the life of the insurance policy.

While whole life insurance policies are much more complex than term life insurance policies and the premiums tend to be higher, they might be the perfect fit for you and your family.

Whole Life Insurance (Image: Flickr)