Whole Life Insurance

life insurance3Whole life insurance, also known as cash value insurance is a basic and consistent type of permanent life insurance which remains in effect your entire life at a level premium. This life insurance is a good choice for you if you do not expect your life insurance needs to diminish over time.

Part of your whole life insurance costs goes into a reserve fund called cash value that builds up over the years your policy is in effect. Your reserve fund is tax deferred and you can borrow against it, until you withdraw it.

In many cases, whole life insurance can be quite expensive, and if you are on a limited budget, you may not be able to afford all the insurance coverage you actually need. But the plus point is that the death benefit is guaranteed as long as premiums are met. Also death benefit will never decrease if you do not borrow against it.

Whole life insurance policies returns will fluctuate with the markets and will usually follow returns available from other investments like equity mutual funds. However, if you decide to quit your policy, your cash value can be paid in cash or paid up insurance.

Before buying the whole life insurance, you need to think carefully about choosing your level of coverage. Too often people make the mistake of insufficiently covering or even worse, financially overextending themselves. This would be a tragic error with whole life insurance policy because defaulting on premium payments can mean policy cancellation and the loss of your entire investment.

Whole life insurance is most suitable for you, if you want to use it as a tax and estate planning vehicle, accumulate cash value for a child’s education or retirement,
pay final expenses, provide money for a favorite charity, fund a business buy and sell agreement and provide key person protection.

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