Benefits of Whole Life Insurance

With Whole Life insurance, part of your premium is applied toward the insurance portion of your policy, a small part of your premium goes toward administrative expenses, and the balance of your premium goes toward the investment or cash portion of your policy. Unlike term policies, you will not have to die to realize some portion of your investment.

One of the benefits of this type of policy is that the cash value portion of Whole Life insurance belongs to the insured. You can take it out in the form of policy loans or you can cash the policy in. An advantage to Whole Life is that the interest you accumulate through the investment portion of your policy is tax-free until you withdraw it.

You can also use the cash value to pay premiums. If unexpected expenses occur, you can stop or reduce your premiums. The cash value in the policy can be used toward the premium payment to continue your current insurance protection – providing there is enough money accumulated.

Another advantage of Whole Life insurance is that the premiums are fixed. Regardless of your age or health, you pay the same amount for the coverage each year.

For people who take out Whole Life insurance early in life, the investment part of the premium can build up substantially, especially in later life. This can provide a very nice lump sum on retirement. You can also use any built up lump sum to cover your children's education. Whole Life policies with sufficient accumulated capital can also be used as loan guarantees for a bank.