Whole Life Insurance
October 17, 2008
Whole life insurance is one of the two main categories of life insurance policies available today. Term life insurance is the other main category. Each of these main categories also has subcategories of different kinds of life insurance.
Term life insurance is more familiar to most people, as more seem to choose it because of the price. It does not cost as much, and you can choose a policy that exactly suits your needs. Nevertheless, Whole life insurance is a little different, and when you know about these differences, you may decide that it is a type of insurance that will best suit your needs and the needs of those in your family.
Whole life insurance is a policy that your purchase to have coverage for the rest of your life. At your death, the beneficiary that you have named will get a check that is the total benefit from the policy. Whole life insurance also allows you to have fixed premiums. You can pay one amount for your policy the entire time you own it, as long as you do not miss any payments. These premiums will never increase. You can even withdraw funds from the policy when you want by taking them as a loan from the insurance company.
With a Whole life insurance policy, your money works for you. It can be placed into an investment account and allow it to earn interest for you. The dividends from this interest can either come to you, or can go back into the policy, which will help you to reduce the amount of the payments. Many people are intrigued by the concept of allowing their life insurance policy to also work as an investment vehicle for them, and manage to build up quite a nice sum of money that is tax-deferred.
Unlike other forms of life insurance that allow you to invest this money, you are not allowed to invest your money into more than one investment account. You cannot move your money from one investment account to another one.
In order to take out a whole life insurance policy, you are required to undergo a full medical checkup to make sure you are healthy. Many people balk at this requirement, and prefer Term life insurance for this reason. However, a checkup is a small price to pay when you realize that you are getting a lifetime of life insurance protection as well as peace of mind for you and your loved ones.
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