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What Is Whole Life Insurance?
It is very easy to understand what a whole life
insurance is and how it can help you. As the name shows, your life insurance policy will provide you a lifelong protection.
Whole life insurance is a permanent type of life insurance which unlike Term Life Insurance, won't end after only a few years.
Disability benefit
The buyer can add an additional premium rider to his policy, should he become disabled, after six months of that disability the life insurance company will pay the premiums for him, for the rest of his life.
Accidental benefit
Another benefit of this is accidental benefit. The buyer can purchases an additional accidental policy, should he become partially or totally disabled, the insurance company will compensate the insured a percentage of payment as specified in the policy.
The compensation varies according to individual policies; the buyers are advice to read through thoroughly.
Whole Life Insurance vs. Universal Life Insurance?
Whole life insurance and universal life insurance are both permanent types of life coverage instruments.
There are four basic parts to both universal and whole life. The mortality cost, which shows what part of your deposit covers the death benefit of the policy. The administration charges which include the premium taxes and costs incurred by the insurance company to manage your policy.
The savings and investment portion is the amount of money you have left to after the mortality costs and administration charges. This money is sometimes called the cash value, fund value, or cash surrender value.
The fourth part of a whole or universal insurance policy is called the return on the savings. This is the interest rate that is credited to the cash value of your policy every year.
A whole life policy is a permanent policy where the premiums are set at a fixed amount and never change until you have paid funded the policy in full. Also, the amount of the death benefit will not increase or decrease over the life of the policy.
One of the drawbacks to a whole life policy is that the insurance company does not have to disclose the mortality cost or the administrative costs to you.
With a universal life policy you can put any excess money into the policy which will increase the cash value of the policy immediately.
In conclusion, if you are more comfortable with a fixed premium and death benefits, then a whole life policy may be your best choice. However, if you want more flexibility and have the time to monitor your policy, then a universal life policy may be your best option.
Whichever type you may choose, always compare life insurance companies, their premiums, rate of return, and customer service. Don't feel pressured to buy a product that you feel may not meet your needs or wants.
Shop around for an agent you can feel comfortable with and who is sensitive to your individual situation and life goals.
You can find out about Universal Life Insurance in this FREE helpful article.
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