Whole life insurance policies are permanent policies. This means that the whole life insurance policy must be paid on throughout your lifetime. A term policy is different because it is purchased for a set amount of time and when that term is over, the policy has to be renewed with higher premiums or turned into a permanent policy. With whole life, there is no renewal or conversion involved.
When you acquire a whole life insurance policy, your monthly premiums are locked in at one fixed price. They can't be increased during your lifetime if you are careful to make your payments in full and on time. Because the money you pay in is invested, your cash value increases. The profits you get from monthly dividends may either be applied to your account to reduce your monthly payments or you may receive the dividends. The money you receive in dividends is tax deferrable -- meaning you are not required to pay taxes on that income.
Whole life insurance gives you the right to withdraw money from the policy while you are alive. You can borrow money against the face value of your policy. Of course, doing either of these will reduce the benefits to your beneficiaries if you do not replace the money before your death.
Unlike universal life insurance, when you purchase a whole life insurance policy you do not have a say in which investments are made, you have no control over premiums (the amount you pay in) or the face value of your policy. Your premium price will remain the same throughout your lifetime as will the face value of your account.
The benefits of having a whole life insurance policy include passivity, moderate dividends and of course, benefits to your loved ones upon your death. If you prefer to be involved in investment and want to be able to raise the value of your policy at your own discretion, a whole life insurance policy is not for you.
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