Whole Life Insurance
Whole life insurance, also known as traditional life insurance, provides permanent death benefit coverage for the life of the insured.
In addition to paying a death benefit, whole life insurance also contains a savings component in which cash value may accumulate.
Interest accrues at a fixed rate and on a tax-deferred basis.
There are several key features of whole life insurance that distinguish it from other types of life insurance:
* Whole life insurance provides coverage for an insured’s entire lifetime as long as premiums are paid.
*Whole life insurance has a savings component that allows cash value to accumulate over time. This cash value can be accessed through loans or withdrawals, and it may grow tax-deferred.
*Whole life insurance typically has a fixed interest rate, which means the rate will not change over time.
*This is different from variable life insurance, which has an interest rate that can fluctuate based on market conditions.
*Whole life insurance typically offers level premiums, which means the premium amount will stay the same throughout the life of the policy.
Different Types of Whole Life Insurance:
Pros for Whole Life Insurance:
*It is the most permanent type of life insurance.
*Your premium stays the same, as well as your death benefit
*You can potentially use as loan collateral
*Investment gains are not taxable
Cons for Whole Life Insurance:
*Costs tend to be higher than Term Policies
*Smaller death benefit.
*No control over how insurance companies investthe cash value of your policy
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