Whole Life or Permanent Life Insurance Pays A Death Benefit Whenever You Die,
Even If You Live Into Your 80’s and Beyond.
There are four major types of life insurance with variations within each.
Traditional whole life/permanent, universal life, variable universal life, and term insurance.
There are variations within each type.
In the case of traditional whole life, both the death benefit amount is chosen and the premium is designed to stay the same,
remain level, throughout your lifetime. Unlike, term insurance that will expire, whole life provides a lifetime of protection.
How Does The Insurance Company Do This?
The insurance company keeps the premium level by charging a bit more premium in the early years.
This additional premium is invested by the carrier which returns income to supplement your level premium
in the later years of your life. These investments help pay the premium cost of your life insurance policy as you age.
Are There Other Differences? Does The Policy Have Cash Value?
By law, when this extra allocation of premium or “overpayment,” reaches a certain amount level,
a policy will have built up or accumulated what is known as “cash value.”
The cash value is available to the policy owner if he or she decides not to continue with the original plan.
The cash value is an alternative, not an additional, benefit under the policy. Cash value is taxed-deferred
until you withdraw or borrow against the available amount.
Should You Purchase A Whole Life Policy?
Insurance should not be you be used as an investment. Financial and asset protection is the reason to buy life insurance.
The historical rate of return found in a whole life policy is lower when compared to higher risk alternatives.
Whole life insurance has no time limit as long as premiums are kept up to date with timely payments.
Cash value buildup may be borrowed to you to pay future premiums or another purpose as compared to term life insurance.
Unlike loans from a financial institution borrowing from your policy requires no credit check or other restrictions.
The loan does need to be paid back. Failure to do so may cause the policy to lapse or reduce the death benefit.
Peter Green Insurance Agent, Certified Insurance Counselor, “CIC.” 714-258-2800, 949-288-5475
An independent life insurance agent located in Orange County serving clients throughout California.
With Permission Insurance Information Institute, Inc. – ALL RIGHTS RESERVED.