Mr. Wannabe | Sex: The Advantages of Whole Life Insurance

Thursday, May 24, 2007

The Advantages of Whole Life Insurance

Whole life insurance is a type of insurance policy that, like term life insurance, pays out upon the death of the person who is insured as long as the policy is in force.

The key difference between these two types of life insurance is that with whole life insurance, coverage is provided for your entire life rather than for a fixed amount of time. As long as your premium payments are up-to-date, a lump sum will be paid to your beneficiary in the event of your death, regardless of when that actually is. This payout guarantees your loved ones will be able to pay your funeral expenses and death duties, and will be able to remain financially stable.

Whole life insurance is typically more expensive than term life insurance, but it provides some significant advantages, the most important of which is the fact that you're covered for your entire life with this one policy. As long as you keep up-to-date with premium payments, your whole life insurance policy never has to be renewed. In addition, the amount of your premium remains constant over the life of the policy, so it's much easier to include the cost of the policy in your budget.

Another important benefit of whole life insurance policies is that you can access the cash value of your policy at any time. This means you have access to what amounts to a cash loan, at a much lower interest rate than a traditional loan, without the need to qualify for the loan, and with no requirement to pay the money back. Of course, it's in the best interests of your beneficiaries to pay back any money you borrow from the policy, but it's not strictly necessary to do so.

Depending on the policy you buy, you may be eligible for some other benefits, too. Some whole life insurance policies allow you to cease paying premiums once you reach a certain age-typically at 70 years of age or older. As long as you have kept up with all payments until the cessation date, you will continue to be covered by the policy once you reach that age, without having to pay additional premiums. Because people are living longer and are more likely to live into their seventies and eighties, this is an excellent way of making sure you're covered after retirement without having to meet the extra expense of insurance premiums at a time when your income is likely to be reduced.

Many Whole life policies are investment-based, meaning that a portion of the money you pay in premiums goes towards assuring your lump sum payout, and the rest of the money is invested. Because of this, some types of whole life policy pay out additional money along with the lump sum payment. With-profit whole life policies pay out a bonus sum on top of the amount that you insure yourself for, the amount of which is determined by the earnings on investments made by the company in the year before the policy is paid out. Unit-linked policies work in a similar fashion in that they provide extra money in addition to the lump sum payment, but in this case the bonus comes from interest and earnings made on money that you pay into the insurance fund.

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