Whole Life Insurance
As the name would suggest, whole life insurance covers you for your whole life as opposed to term insurance which covers you for a specific period during your life. In most cases, the premium and death benefit remain the same. There's also a cash value that builds with a whole life insurance policy that is a return on a part of your premium that your insurance company invests. You may borrow against your cash value, which is also tax-deferred until it is withdrawn.
How Whole Life Insurance Works
Whole life insurance policies pay a lump sum at the event of the insured's death or, in certain cases, on early diagnosis of a terminal illness. This is dependent on the required premium payments being made throughout the course of the life of the policy.
Payout can be through a fixed lump sum or can be dependent on the performance of its investments after mortality costs and other expenses are taken into account. These factors also dictate the level of premium that is payable to the dependent(s) if performance-based periodic payments are chosen. Alternatively, the level of premium payable may be fixed to a certain time scale, i.e., the same amount paid monthly.
A range of flexibility is permissible with some whole life insurance policies that allows any prospective payment to be maximized over a specific period of time. Coverage can be continued once this period is over and the policyholders are older. However, premiums will increase or the level of coverage will be reduced. At any time, the overall target benefit can be set for life.
Whole life insurance policies are beneficial to those who wish to have increased coverage while they have dependent children, but want reduced coverage later on to last their life. An advantage of this kind of coverage as opposed to purchasing a term life policy from the outset then replacing it later with whole life insurance is that the insured individual is underwritten for life and is not prevented from obtaining future coverage should they ever have a serious illness such as cancer.
Want to talk to someone about Whole Life Insurance?
Contact a Bryan Insurance Agent today if you need more information about whole life insurance or would like a quote tailored to your specific requirements. You can also look through our life insurance policies to see which one suits you best.