As you know there are several types of life insurance, and one of those types is called whole life. Whole life insurance is a life insurance policy that pays a lump sum on death. In some cases, it may also pay if a diagnosis of a critical illness is detected in the policyholder.
Whole life policies can vary a great deal when it comes to the way they are paid out. In some policies, the payout can be a fixed sum of money that has been decided on at the time the policy is started. In other cases, the payout may be dependent on investment performance after mortality costs and other expenses are deducted.
Within the arena of whole life polices, the timing and the amount of the premiums may vary as well. In some policies the premiums are paid at regular intervals such as monthly or every six months and the premium amount is fixed. In other cases, the premium amount will vary according to how the insurance investment is performing.
Whole life can also have a lot of flexibility in how it is bought and used. For example, some policies allow for the payout over a specified period of time, such as ten years. Once this period is over, the policyholder can continue the insurance coverage but usually at a higher premium rate.
These types of life insurance policies are useful for people who need increased coverage while they have dependent children, but will need reduced coverage later on in life that is all but guaranteed. This is not always the case with term life insurance where an illness can prevent the person from getting the policy.
It should be understood that whole life insurance often requires that the policyholder pay premiums for the life of the policy. Another scenario for whole life is for the policyholder to pay u front the cost of the entire policy, or that the cost of the policy be paid within a certain amount of time, such as five years. This can be expensive, and many consumers simply cannot afford the cost when it is presented in this fashion.
There are certain benefits associated with a whole life policy. Many companies will guarantee that the policy's cash values will increase regardless of the performance of the company. This can make a whole life policy an attractive investment for some people.
In addition, there is liquidity with these policies that other types of insurance may not be able to match. Cash values are often thought to be liquid enough to be used for investment capital, but the policyholder must be financially healthy enough to continue making the higher premium payments.
There can be some tax advantages as well, as cash value access is tax-free up to the total premiums paid. The remainder of the value can be tax-free if taken in the form of loans from the policy. If the policy lapses, tax payment will be due on the outstanding loans. If the insured dies, death benefit is reduced by the amount of any outstanding loan balance.
While whole life is a good option for some people, anyone considering this type of insurance should spend some time with a reputable agent in order to learn the details of how to use a whole life insurance policy to its best effects.
Got a Question? Ask.
Ask the community a question about this article:
Frequently Asked Questions
How will a bad catalytic converter affect the ...
By: carqueations | 09-09-2008
how will a bad catalytic converter affect the performance of a 96 ford explorer?
How does the satellite phone connects itself to ...
By: Harry | 09-09-2008
How does the satellite phone connects itself to the satellite(from a technical point of view)?
Home
By: Janine | 09-09-2008
How can I fine the name of a Home owner in Lapuenta Ca from the 1900's
Help with summer trip
By: jeri | 09-09-2008
Celebrating out 30th anniversary nxt summer 2009 want to take our boys 14 and 17 on a cruise, but not big fans of humid weather, is Greece and Turkey humid in the summer?
From Africa to Us to Mexico
By: brandi | 08-09-2008
What do I need if I am a South African Visiting theUnited States. I have a Visa to travel to Us but while visiting US I would like to Visit Mexico.
Can i get my series 7 license before joying a ...company?
By: Frank | 08-09-2008
can i get my series 7 license before joying a company?
Q&A Powered by:
More from Peter Kenny
Home Improvements That Can Help To Increase The Value Of Your Home
By: Peter Kenny | 04/10/2008 | Finance
As most people are aware the value of properties in the UK has been falling over recent months, and thousands of pounds have been wiped off the value of some homes, with many industry officials predicting that house prices will continue to fall over the coming months and even over the next couple of years
Save Money By Switching Your Utilities
By: Peter Kenny | 04/10/2008 | Finance
Most households are now feeling the pinch when it comes to their finances, and for many it has become increasingly difficult to make ends meet and cope with monthly payments and outgoings
How To Find An Affordable Loan
By: Peter Kenny | 03/10/2008 | Finance
For many consumers it can be very difficult to find loans they can afford and there can be many factors that can affect the cost of a loan for an individual like bad credit or other similar issues
Know What To Look For With A 0% Balance Transfer Credit Card
By: Peter Kenny | 25/09/2008 | Finance
If you have high interest rate credit cards with outstanding balances on them you may find that the monthly repayments that you are making on the cards are very high
Are Store Cards Worth the Cost?
By: Peter Kenny | 24/09/2008 | Finance
Store cards have become very popular in recent years. While these are essentially the same as credit cards, you can only use them at one store the store whose name appears on the credit card and which issued you the card
How Difficult Can It Be To Get Adverse Credit Loans?
By: Peter Kenny | 24/09/2008 | Finance
It has always been a problem for people to get finance when they have either a low credit rating or a damaged credit history and with the financial market in the state it is currently in things have only become more difficult with lenders making the criteria for taking out loan more strict meaning fewer people are eligible for loans.
Tips To Help You Deal With Credit Card Debt
By: Peter Kenny | 23/09/2008 | Finance
The convenience of using a credit card for purchases of all kinds and cash transactions cannot be disputed. When you see an item that you want to buy but for which you do not have the cash on hand, you can easily get what you want when you use a credit card for the purchase
Improve Your Home With A Secured Loan
By: Peter Kenny | 17/09/2008 | Finance
When you want to make improvements to your home and do not have the available cash on hand, many lenders will allow you to borrow varying amounts of money for this purpose
Finance 
