Lest you should remain ignorant, you’ll find here a whole life insurance explained. A whole life insurance policy is a kind of insurance designed to provide cover during your lifetime. Most often, you are required to pay the same amount of premiums all through its validity. Moreover, the younger you are at the time of buying such a policy, the lower is the premium payable.
Whole life policies are structured to grow cash value, which is exempted from income tax, and are guaranteed to offer benefit in case the insured party dies when the policy is still in force.
A whole life policy can be treated like an investment because of its feature of cash value. Though you are required to pay more premiums, compared to term life insurance, you are allowed to borrow against the policy against its cash value buildups.
Even if you had borrowed funds from your cash value, your insurance remains intact. It simply means that even if you die, after having borrowed funds, your beneficiaries are entitled to get an amount equal to the face value minus the amount you borrowed against cash value of your policy.
As the name suggests, a whole life insurance policy offers coverage during your complete lifetime. It guarantees some payment provided the premiums have been paid up-to-date. Additionally, it also builds cash value that you may use during your lifetime. On its surrender, you can get its cash value.
Compared to term life insurance, a whole life insurance is costlier as it guarantees some kind of payment whether it’s by way of its face value or cash value on surrendering the policy after its tenure is over. It can be additionally costlier when you allow the entire policy to lapse without redeeming cash value.