Whole Life Insurance

Whole Life: Insurance: What You Need to Know

A whole life insurance policy is one that will last your entire life. Typically, you will pay premiums throughout the term of the policy, although different policies and providers offer various payment terms (e.g. 10 years). Upon your death, the policy will pay benefits to the beneficiaries you choose.

Guaranteed Rates of a Whole Life Insurance Policy

When compared to other types of life insurance policies, whole life policies offer the most significant guarantees. Therefore, it’s a very good option for people who do need coverage on a permanent basis.

There are three guaranteed rates of a whole life insurance policy:

  • Expenses: the allocation for administration expenses is guaranteed and will never increase
  • Cost of Insurance: also known as mortality rate, this rate will never increase and is guaranteed
  • Interest Rate: the interest rate is guaranteed and will never decrease.

There are also three guaranteed values of a whole life insurance plan:

  • Guranteed Premium: Premiums that you will pay are guaranteed to remain consistent throughout your life as the insured.
  • Guranteed Death Benefit: The benefits that are due to your beneficiaries will never be reduced, unless you withdraw cash from or borrow against your policy.
  • Guranteed Cash Value: Your policy will build cash value, which is guaranteed. This growth is tax-deferred as is stated under current federal laws.

Dividends and Whole Life Insurance Policies

The cash value of participating whole life insurance policies might also include the value of dividends paid to those who hold policies. These may be paid in cash, but the most popular choice is usually to allow them to accumulate with interest. This increases the growth of the cash value of the policy. You can also elect to purchase additional death benefit. While you are searching for a whole life insurance policy, be sure that you look for an insurance company with a strong history of paying dividends.

Whole life insurance policies also include various tax-free benefits, including access to policy values on a tax-favored basis and tax-deferred build-up of cash value.

Whole life insurance may be the best insurance option for you and your family. For help finding the best plans, providers and quotes for whole life insurance, contact us to speak with one of our licensed professionals.