Life insurance is designed to protect your family in case you suddenly pass away and leave substantial debt in your place. There are different types of life insurance policies geared toward many purposes.
One of the most common forms of life insurance is whole life insurance. A whole life insurance policy, also sometimes known as a permanent life insurance policy, operates just how it sounds. Whole life insurance lasts as long as the policyholder lives and continues to pay for it. The policy will pay out once the policyholder passes away.
Unlike with a term life insurance policy, you will not have to renew a whole life insurance policy or purchase another one if you outlive the term. Here’s a little more on how it works.
Does Permanent Life Insurance Offer Cash Value?
Some whole life insurance policies allow a cash value option, which means you can withdraw cash value from the policy while it is still active. A portion of your premium is used as an investment that accumulates funds over time (separately from your death benefit, which remains constant) These options are also offered within universal life insurance policies.
How Much is a Whole Life Insurance Policy?
The cost of a whole life insurance policy varies depending on your age, location, health, policy limits and other factors. Older individuals tend to pay more for life insurance, as your life expectancy decreases as you grow older.
These premiums are generally paid on a monthly basis up until the policyholder’s death. However, some policies have a limit on how long premiums are paid, such as when the policyholder reaches a certain age. Be sure to speak with your insurance agent about what policy is right for you and what limits fit your life insurance needs.
Is Whole Life Insurance Better than Term Life Insurance?
There is no set rule that says whole life insurance is better than term life insurance or vice versa. This is because each policy is made for different purposes. A term life insurance policy can be useful for those who only want coverage for a specified amount of time, such as until they’ve paid off a certain debt. In that case, a term policy might be your answer.
Some people also choose to have both a whole life insurance policy and a term life insurance policy simultaneously. The term policy allows you to have extra coverage until a debt is paid, but you will still have whole life insurance to remain in place for the future.
Consider you and your family’s life insurance needs carefully, and speak with an insurance agent about what policy is best for you.