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Define Whole Life Insurance

If you’re looking into purchasing life insurance for the first time, or you’re wondering whether your current policy is the best one for you, you may have come across websites advocating either term life insurance or whole life insurance. Making the best life insurance choice for your family necessitates an understanding of the terms used in advocating one policy or another, so it’s important that you know how to define whole life insurance and term life insurance in order to understand your options.

 

How Do You Define Whole Life Insurance?

 Whole life insurance is, as the name implies, insurance that lasts for your whole life. You can also define whole life insurance by referring to it as permanent life insurance. Premiums for whole life insurance remain the same throughout the life of the policy. One benefit of whole life insurance is that as you pay premiums from year to year, a portion of that money goes toward a cash value account which is invested by the insurance company. You can borrow against your cash value or pay off your policy early. The rate of return on whole life insurance investments is generally low, but your cash value is tax-deferred until you withdraw the money.

 

What is the Comparison as You Define Whole Life Insurance Versus Term Life Insurance?

Whole life insurance differs from term life insurance in that term life insurance is in effect only for the period of time, or term, specified by the policy, whereas whole life insurance is intended to be permanent unless you decide to end it. You will never need another medical exam for insurance purposes and your premiums will not change. Whole life insurance premiums are generally higher than term life insurance, but they build cash value which is tax-deferred. If you never withdraw your cash value, your beneficiaries will not need to pay taxes on it upon your death. With term life insurance, you effectively lose the money you invested in premiums if you reach the end of term and do not either convert the policy or renew it. Whole life insurance, however, will never expire and your family will be provided for until your death.

 

How Do You Define Whole Life Insurance Options?

As you define whole life insurance, there are several kinds of policies to be familiar with. Traditional whole life insurance policies promise a specified minimum rate of return on the cash value of your policy, whole interest-sensitive policies vary in their rates based on the economy. Interest-sensitive policies may allow you to increase the policy amount while keeping the same premium. As an investment option, whole life insurance cannot compare to other types of investments since the rate of return is relatively low. However, the benefits of whole life insurance make it a viable choice when considering insurance options for your family. Single premium whole life insurance means that you pay all costs for the policy in one lump sum. This is beneficial for someone who has the means to purchase the policy up front and doesn’t want to deal with a monthly premium.

Shopping for whole life insurance is like making any other major purchase: you need to shop around to find the best rates. Compare quotes among several companies in order to determine who can give you not only the cheapest rates but also the best service. If people you know have purchased life insurance through a particular company, ask them for recommendations. Purchasing whole life insurance is a big decision since it will be the vehicle for ensuring that your family is provided for in the event of your death. Enter your zip code at the top of this page for your free whole life insurance quote.

 

What is Whole Life Insurance