What is Whole Life Insurance?
Whole Life Insurance is a type of permanent life insurance where, similar to a term life insurance policy, the policy will pay a specified amount to a beneficiary or beneficiaries upon the death of the insured. Whole Life Insurance is different from term life insurance in that with whole life you are able to accumulate cash value in the policy. This cash value can be accessed by the insured when they are still alive either by withdrawing it or taking a loan against the policy. This type of policy lasts for a person’s whole lifetime rather than a certain number of years and the premiums for the policy are fixed.
Accumulation of Cash Value
Cash value in a whole life policy builds during the life of the policy. There are many uses for this cash value but it is important to keep in mind that the cash value does not increase the death benefit of the policy. So, for example, if you purchase a whole life policy with a death benefit of $100,000, no matter how much cash value you have in the account, the death benefit your beneficiaries will receive is still $100,000. Although, cash value can be used for other things including taking out a policy loan or surrendering the policy to obtain the cash value but forfeit the death benefit. In terms of generating cash value, whole life policies can be a good option. Whole Life policies should never be considered as a short-term investment to withdrawal the cash value. It takes many years for cash value to develop in the policy so it is a long-term investment.
See What Whole Life Options Are Available
Whole Life Insurance is a big investment to make. If you are considering one, we can help you to see what whole life product might be suitable for you! Please feel free to contact our office for a quote and to speak to a representative.