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Whole life insuranceIt is clear from the name that this type of insurance covers the entire lifespan of policyholder, which is quite opposite to term life insurance. When the policyholder dies a death benefit (in other words the face value of the policy) is given to beneficiary. There cannot be set date of the termination of the policy, because it fully depends on life of policyholder. One of the most attractive features of the whole life insurance is that the premium remains unchanged. Fixed premium is achieved through allotting the cost of insurance across many years. For retired persons this feature is very useful, since they don’t have to deal with rising premiums. Whole life insurance has principle difference from term life insurance: accumulation of cash value. Whole life insurance accrues funds, which you can get subject to canceling the policy. Note that insurance companies usually specify a period of time after which you can cancel policy and claim money. But in case you want the amount of cash value be the same as a face value of the policy, you should live no less than 100 years, as it is set by the policy. Provided you happen to turn 100 year old, you will get face value in a lump sum. In addition to all abovementioned advantages of whole life insurance, there still is something to mention. The policy allows you to borrow some of the cash value. The sum you borrow is certain to be returned, but where you can find an opportunity to your own lender? You won’t be turned down anyway. Whole life insurance sometimes pays dividends, which is rather useful if you are retired person. This is not the only way to use the cash value, however. You can also borrow some of the cash value as a loan. The money has to be paid back, but there is no approval process and no risk of being turned down. You are your own lender. Some whole life insurance pays dividends, so it can be used to supplement your retirement income. |
Types of Life Insurance
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