Whole Life Insurance

Whole life insurance

A whole life insurance policy is designed to cover you your entire life, and not just for a specific period such as term insurance. Your death benefit and premium in "most" cases should remain the same. Whole life insurance also can build cash value, which you can borrow against. This cash value is a return on a portion of your premiums that the insurance company invests.
 
Are there different types?

Yes, the most common types include interest-sensitive, traditional, and single-premium whole life. The traditional whole life insurance policy gives you a minimum guaranteed rate of return on what you put in. An interest-sensitive whole life insurance policy will return a variable rate on your investment, similar to an adjustable rate mortgage. With variable-interest whole life insurance you possibly have more flexibility with your life insurance policy like increasing your death benefit without raising your premiums (depending on the economy) and controlling the rate of return on your cash input. Single-premium is for someone who would like to purchase a policy in full, with no payments. Like other whole life insurance options, single-premium whole life insurance builds value and has the some tax shelter benefits on returns.

Why choose a whole life insurance policy over other flavors of life insurance policies?

Unlike term life insurance, some of your premium money goes toward the building value, which in turn could pay off your entire policy only after a few years. Also, you can choose for your premium to remain constant while you are covered (unless you choose otherwise). And, unless you make a change to your whole life insurance policy, you have lifelong coverage with no future medical exams. Whole life is also considered because of the tax savings.