Free Insurance Guide

Is Whole Life Insurance For You?

When the time comes to purchase a life insurance policy, you will face many questions that don't always have easy answers. With an overload of information it is not uncommon for people to rush to a decision regarding which type of life insurance is best. Some people even get conned into buying some sort of unnecessary policy such as mortgage life insurance.

Understanding that your needs and the needs of your family are unique and specific to your situation makes it easier to compare life insurance policies. Here we take a closer look at whole life insurance and why it could be the right answer to your life insurance question.

What is Whole Life Insurance?

You have two basic choices when selecting life insurance, whole or term policies. Term policies provide coverage for a specific period of time, whereas whole life insurance policies cover you for the entire length of your life. There are pros and cons to each type of policy, however here we will focus only on whole life insurance to give you a better understanding of this type of policy.

Whole life insurance provides a death benefit and premium which in most cases remain the same throughout the length of the policy. You can also build cash value with whole life insurance. This comes from the portion of your paid premiums that is invested by the insurance company handling your policy. You can borrow against this cash value which is tax-deferred until you withdraw the money from your policy;  however, this also makes whole life somewhat of a risky life insurance policy because of the temptation involved.

The benefits of whole life insurance include having coverage for the remainder of your life with guaranteed death benefits and premium payments (in most cases). You do have the option to make changes to your policy which may result in changes in coverage or benefits, a flexibility which is often appreciated by policy holders. It is not recommended to use a whole life insurance policy as an investment tool, despite the fact you can earn money through the policy. This is a more conservative approach to life insurance with a much lower return than other investment vehicles. The main purpose of whole life insurance policies is to provide your family and other beneficiaries protection at the time of your death, as well as benefiting the policy holder with tax benefits and cash value.

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