Brief Tip About Whole Life Insurance Policy
Whole life insurance is a type of permanent life insurance that includes insurance and investment component. Like the universal life insurance, the investment component in whole life insurance will be accumulated into cash value so the policyholder can borrow or withdraw it. The cash values are also tax-free. If the insured dies, the death benefit will be reduced by any outstanding loans. The premiums usually paid in single lump sum or monthly payment.
Whole life insurance can be used for individuals with any kinds of situation. For example, for family members whose income dependent on one person; pay down debts or mortgage; liquid cash for beneficiaries; and so on. The insurance's purpose is not limited only for death benefit. Since whole life insurance include the investment component, the policyholder are free to withdraw or take loans from its savings with note their death benefit will be reduced if they do not repaid the loans.
If you wonder which one is better between whole life and term life, I'm gonna say whole life. Term life is a temporary insurance and simply offer death benefit only. Term life insurance has fixed period of time and the premium remains level, whereas whole life insurance offers entire life coverage for the policyholder. Sometimes, term life insurance premiums increases each year so the policyholder opt to nullify the policy since they can afford to pay the increasing premium.
There are several types of whole life insurance which listed below:
- Whole Life. The premiums are constant and paid until age 100.
- Limited Pay. The premiums are paid for certain term (20 years) and remain constant.
- Current Assumption Whole Life. Three benefits of this type are fixed premiums, better investment potential, and "forced" savings feature.
- Variable Life. The risky policy which benefits depends on investment performance. The premium, however, remain constant with no guarantee of cash build up.
- Variable Premium Whole Life. The policyholders are allowed to determine the amount of premiums. There are two death benefit options, Universal A - Level death benefit and Universal B - Increasing death benefit.
- Variable Universal Life. The insured can direct the investments into a broad selection of investment options. It combine the death benefit protection and savings accumulation.
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