Finding the Right Whole Life Insurance Policy
Life insurance is can help you loved ones replace your lost income if you were to pass away. In most cases, you'll have two main types of life insurance to choose from: permanent life and term life.
Whole life insurance — a type of permanent policy — may be an option for people looking for a death benefit in addition to cash value that can be accessed while they are living.
Whole Life Benefits
Whole life insurance includes a few benefits that those in the market for a policy might find attractive:
- Lifetime coverage – Term life insurance expires after the term ends. If you outlive your policy, your designated beneficiaries don't receive a payout. If your policy can be renewed, it may be more expensive. Whole life insurance stays in effect for your entire life (as long as you pay your premiums on time and in full).
- Level premiums – Whole life insurance policies have level premiums, meaning your monthly payments won't increase over time. Some term policies may be written with premiums that increase at different intervals.
- Cash value – Unlike term plans, whole life insurance policies accumulate cash value over time. A portion of your premium goes towards the cash value of the policy. It can be borrowed against for a loan, used to pay premiums or cashed out when you surrender the policy. These policies guarantee a certain rate of return.
Do Your Homework
As with any major purchase, it's important to do your homework when trying to find the right whole life policy. Look around for reputable life insurance companies and compare their products. Determine what benefits you need and how much you can afford in premiums. Read through our guide, How to Define Whole Life Insurance, to learn more.