Whole Life Insurance Explained

It is hard to think of death and it is even harder to actually prepare for your death. However, it is inevitable and many people know this. In fact, practically more than half of the population of the country has come to terms with the inevitability of death and have thus prepared for it. Recent studies show that once people have had whole life insurance explained to them, they are taking out life insurance, not only for themselves but for their loved ones.

The Basics of Whole Life Insurance Explained

There are actually different types of insurance policies. Not surprisingly, people are confused about these policies. They’ve heard of whole life insurance and term insurance. Of course, they could always look for information that would have term and whole life insurance explained to them. They’d be able to understand the difference between the two and why they should take out a whole life insurance in favor of the other.

But why should you take out a whole life insurance? Perhaps, you’d understand why if you had whole life insurance explained to you. Basically, a whole life insurance is the type of insurance where you are insured for the duration of your life in addition to your beneficiary getting a lump sum payment in case of your demise. Actually, there are several whole life insurance versions and riders that you’d find if you compared whole life insurance quotes from various companies.

So, yes, with whole life insurance you are insured for your life’s duration. But what’s the catch? Is there a catch? Unfortunately there is, whole life insurance stays as long as you have no default in your premiums. As long as you are paying your premiums regularly, you are guaranteed a lifetime of insurance. This accumulates cash value so your loved ones will benefit from it upon your death regardless of when you actually die.

Features of Whole Life Insurance Explained

You’d probably understand whole life insurance and be able to differentiate it from other types of insurance if you have the features of whole life insurance explained to you. As mentioned, a whole life insurance policy offers life-long coverage as long as your policy is active. Other features include:

  • The premiums are also fixed throughout the duration of the insured’s life.

  • The beneficiarys are given the lump sum payment on the date of maturity or the death of the insured, whichever comes first.

  • The face value of the insurance is fixed at the time the insurance contract is entered into.

  • You cannot just increase the coverage of a whole life insurance. You can only do this if you buy an additional dividend, rider or policy.

  • As the policy runs, it accumulates cash value which increases yearly as the insured continues to pay the insurance premiums. Having had the whole life insurance explained to you, you'll know that the amount accumulated over the years is regarded as earnings but these are not taxable unless you surrender your insurance policy.

  • You can actually draw up loans up to the policy’s cash value. You do not need to pay for these loans. Of course, they’d be deducted from the death benefits your beneficiary will receive.

    • If you fully understand about whole life insurance explained to you, perhaps you’d know whether you want this type of insurance or not. Remember, you cannot fail to pay premiums. This is why not all people can afford a whole life insurance.




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