Whole Life Insurance
Understanding Whole Life Insurance - Rates and Premiums
When you're seeking whole life insurance protection, then permanent coverage is the answer for you. Once that you've qualified for whole life insurance, then your protection is life long and cannot be cancelled except in rare circumstances. Your whole life insurance premiums are protected. And your whole life insurance policy provides you with a guaranteed death benefit.
Whole life insurance may make better sense for you than term life insurance once you've studied the life insurance quote and "fine print" or policy terms and conditions. With whole life insurance, you obtain protection plus ongoing cash value. In other words, whole life insurance establishes a benefit to your family plus whole life insurance acts as a conservative financial investment. The cash value of a whole life insurance policy builds over time on a tax-deferred basis.
In certain whole life insurance policies, the underwriting firm pays policy holders a regular dividend. In some cases you can re- invest or "roll up" your dividend into your whole life insurance in order to increase the policy cash value or increase your coverage. The cash value increase can be used while you're alive. For example, you might use it to supplement retirement income or perhaps contribute to your children's education costs. However, the primary purpose for whole life insurance is protection. Whole life insurance is more expensive than term life insurance. And, while whole life insurance cash values can increase your whole life insurance cash values decrease when you withdraw or borrow against the policy.
As an "investment product" whole life insurance may not equal the best performing commercial bonds. However, whole life insurance contracts usually call for a dividend payment which the insurance firm pays you essentially for the use of your money in the open market. As they "win" from their portfolio bets, so can you win in the form of a dividend paid on your whole life insurance policy. What can you do with the dividend? You can take it as income. You can reinvest the dividend in order to increase the cash value of your whole life insurance policy. You can reinvest the dividend in order to lower the premium costs of your whole life insurance policy. Even while your cash value grows on your whole life insurance, you might consider "borrowing" against your then current cash value in your whole life insurance policy. Dividends from your whole life insurance policy provide flexibility which you can "manage" based on your perceived needs and self interest. In this way dividends from your whole life insurance policy can be viewed as a cash value "while you're still alive". The accumulation or increase in cash value from your whole life insurance policy should not drive your investment decision. Rather, you buy whole life insurance , much as you would term life insurance, for the protection.
When looking at a life insurance policy don't forget to enquire with your employer in order to determine if there's a sponsored whole life insurance program. This form of whole life insurance coverage places together into a pool good poor and average risk persons. Because there's greater purchasing economy in the larger pool of applicants, you get the benefit of lowered premium costs on your individual portion of the plan. Also, you may get coverage even without providing evidence of insurability. Such group plans for whole life insurance coverage are administered professionally on your behalf and are paid for out of payroll deductions. In many cases these employer plans for whole life insurance coverage can be taken to a new job so long as you maintain payments.