You love your family and you're concerned about their future financial well being. You want to make sure your family is taken care of so you are considering investing in life insurance. There are many, many options available today and a whole life insurance policy is one of those options. This article is going to give you an explanation of what whole life insurance is, talk about the different types of whole life insurance, and discuss some of the pros and cons of a whole life insurance policy. The different types of whole life insurance include traditional whole life, Universal whole life, and variable whole life. We'll start by discussing a traditional policy.
A traditional whole life insurance policy
is a type of permanent life insurance. It is meant to remain in effect for the "whole life" of the policyholder. A whole life insurance policy provides a fixed amount of coverage in exchange for a fixed payment schedule and remains in effect until the policyholder dies and a death benefit is paid, until it is canceled by the policyholder, or until it reaches what is known as the cash surrender value which is a sum of money that the policyholder is entitled to receive before his or her death and is based on the premiums paid to date minus any associated fees.
A variable life insurance policy,
like a traditional one, is meant to provide protection to the policyholder until his or her death. This type of policy is usually the most expensive but may be worth the extra cost if you intend to keep this policy for the long-term. A variable life insurance policy allows you to use a portion of your premium payments to invest in various types of financial instruments without being taxed on your earnings until the end of the policy.
A Universal life insurance policy,
like the others discussed above, is a type of permanent life insurance. A universal policy allows some flexibility in the premium payments and the amount of coverage and also offers the ability to grow in value with tax-deferred investments.
What are the pros and cons of whole life insurance?
The cons include the cost of the policy, whole life is more expensive than a term life insurance policy. You will also have to have the policy for at least 15 years to make a whole life insurance policy worthwhile. On the plus side, are some of the benefits discussed above, the ability to make tax-deferred investments and grow the overall value of the policy. Another benefit of a whole life insurance policy is that the premiums paid generally stay the same and do not increase over time and they can never expire.
I hope this article helps you learn a little more about what whole life insurance is all about. There are so many options when it comes to choosing the right life insurance policy for you and your family. You should find a good, knowledgeable insurance professional to give you more details and you should definitely shop around to find the policy that's going to work best for you and your family.