WHOLE LIFE INSURANCE

Whole Life Insurance (sometimes referred to as Permanent Insurance) does not end after a specified period of time, it lasts until the policy owner's death. Whole Life Policies have a savings component that can be used for wealth accumulation (cash value built up). The premiums for whole life are usually much higher than term life insurance policies, but they remain constant throughout the life of the insured.

A permanent life insurance policy is a policy that provides life insurance coverage throughout the insured's lifetime. The policy never ends as long as the premiums are paid. Additionally, Whole Life policies provide a savings element that builds cash value.

Whole Life Insurance is well suited to needs that do not diminish over time, such as paying estate settlement costs and taxes. Generally, the life insurance rate (or premium) for this type of policy remains the same throughout the life of the insured. During the early years of the life insurance policy, premiums are much higher than those of a term life insurance policy. As a result, and by design, these life insurance policies develop cash values which can be accessed by the owner of the policy through surrenders or policy loans.

CASH VALUES IN WHOLE LIFE INSURANCE POLICIES TYPICALLY INCLUDE TWO COMPONENTS:
  1. Each life insurance policy has a guaranteed cash value, which typically grows based on a pre-determined schedule during the life of the policy and which "endows" or equals the death benefit upon maturity of the policy (typically at age 100).
  2. In addition, most whole life insurance policies have a non-guaranteed cash value element, typically made up of "dividends" or "excess interest" which can enhance the value of the life insurance policy over time.

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