What is whole life insurance and what are the benefits of buy a whole life insurance plan?
- Whole life insurance is the most common type of permanent insurance policy you can purchase today in the US. In addition to providing cash benefits to your beneficiaries upon your death, the coverage provides a guaranteed cash value during the life of the policy. Part of each premium payment is applied to the policy’s cash-value account, which grows on a tax-deferred basis (based on current federal tax laws). The policyholder can withdraw the cash value as it accrues and use it as he or she sees fit.
- Because whole life insurance is a type of permanent life insurance, a whole life insurance policy provides life-long protection — as long as premiums are paid. Certain aspects of whole life insurance can make it an appealing choice over a term life insurance plan. With whole life insurance:
- Your premiums and death benefit are fixed.
- You can withdraw funds or take out a loan.
- You have a guaranteed rate of return.
- Whole life insurance can be a good choice by itself or combined with other types of coverage. For example, adding term life insurance when your family’s growing can provide a higher level of protection at an important time. Then, when the term policy expires, your whole life policy continues providing lifelong coverage.
- Either way, whole life is permanent financial protection, no matter how or when you die.