Monday, December 15, 2014

Whole Life Insurance Definition

Whole Life Insurance Definition

Whole Life Insurance definition can be simple or complicated depending who you’re talking to, in my personal style I like to keep thing simple and easy, so that everybody can understand me.

Whole Life Insurance Definition

Whole life insurance provides lifetime death benefit coverage for a level premium. In other words, is designed for permanent, lifelong protection and also Premiums are level for the life of the insured (as long as premiums are paid) and offer guaranteed cash value accumulation within the policy.
Take in consideration that for younger people, whole life premiums are much higher than term life insurance premiums because term life insurance premiums rise with increasing age of the insured.
Part of the insurance contract stipulates that the policyholder is entitled to a cash value reserve that is part of the policy and guaranteed by the company. This cash value can be accessed at any time through policy loans that are received income tax-free and paid back according to mutually agreed-upon schedules and are available until the insured’s death.
In the event any loans amounts are outstanding (e.g. not yet paid back) upon the insured’s death, the insurer (Insurance Co.) subtracts those amounts from the policy’s face value/death benefit and pays the remainder to the policy’s beneficiary (Family member, institution, charity, etc.).
Whole life insurance Pros:
  • Guaranteed death benefits
  • Guaranteed cash values growth
  • Fixed predictable premiums
  • Mortality and expense charges don’t reduce the policy’s cash value
  • And many more…
Whole life insurance Cons:
  • Inflexibility of its premiums
  • The internal percentage of return may not be competitive with other savings and investment alternatives.
Whole Life Insurance Definition






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