Unlike term life insurance, whole life insurance policies are permanent. "Permanent" means there are no specific periods for the policy to be in effect. You purchase the policy, pay monthly premiums and have your policy for life. Term life policies require renewal at a higher cost or must be converted to a permanent policy when the term runs out.
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.
If you would rather not be involved with choosing investments for any reason and are fine with the original value of your whole life insurance policy, then this is the type of policy you will want to choose. You will receive modest dividends and your loved ones will be taken care upon your death with a whole life insurance policy.
About the Author:
Need advice on life insurance? View our whole life insurance to know more about Whole Life Insurance Defined. Learn tips on how to save money on life insurance and much more http://www.wholelifeinsurance-explained.com/
1 comments:
Thanks for the explanation. I recently bought some term life insurance from a website called MonkeySee.com, but want to balance it with some limited whole life insurance, so I'll be sure to check this site out. Thanks!
Mitch
Post a Comment