Whole life insurance, also known as permanent life insurance, is a type of life insurance that provides coverage for the policyholder’s entire lifetime, as long as the premiums are paid. Unlike term life insurance, which provides coverage for a specific period of time, whole life insurance does not expire as long as the policy is in force.
When purchasing a whole life insurance policy, the policyholder chooses the amount of coverage they want and pays a premium that is typically higher than the premium for a term life insurance policy of the same amount. The premium is based on factors such as the age and health of the policyholder, the amount of coverage, and the insurance company’s underwriting guidelines.
In addition to providing death benefit protection, whole life insurance policies also accumulate cash value over time. The cash value is based on a portion of the premium that is set aside in a savings account, which earns interest. The policyholder can access the cash value by taking out a loan against the policy or by surrendering the policy for its cash value.
Whole life policies have a guaranteed death benefit amount and the premiums remain level throughout the life of the policy. Additionally, the cash value component of a policy can be used as an investment tool.
It’s advisable to consult with an insurance agent or financial advisor to understand your options and find a policy that fits your specific needs. They can help you determine how much coverage you need and how long you need it for, and can also help you compare different policies and rates.