Whole Life Insurance

The advantages of whole life insurance are varied. When it comes to choosing between term life insurance and whole life insurance, it's important to understand which policy is right for you.

Life Insurance Premiums
Whole life insurance requires the policy holder to pay a fixed premium, while term life insurance premiums will generally increase every time you renew the policy. While the initial life insurance premium for a whole life policy may be higher, it will remain constant and will eventually be lower than what you would pay after renewing a term life policy several times. Also, term life premiums can vary depending on your age, health and other factors. Whole life premiums will remain fixed, regardless of how you age and what your overall health is like.

Cash Value
Because of the way a whole life policy is structured, it has a cash value. If you choose to end the policy, you get the value in cash. These usable cash reserves are one of the most important and versatile advantages of whole life insurance.

Tax Benefits
Contributions to a whole life insurance policy are tax-deferred, which means you do not have to pay any taxes on the value of the whole life insurance policy. Term life policies do not have such an advantage.

Length of Coverage
A whole life insurance policy will cover you for your entire life, unlike term life insurance policies. With term, you purchase coverage for a set number of years, and the premiums increase whenever you renew. Whole life insurance policies never need to be renewed.

Death Benefits
Whole life insurance guarantees that upon your death, cash values and benefits will be paid out. If you outlive a term life policy, you receive no money back. You will also earn dividends from a whole life insurance policy, and most people either cash out the dividends or put the amount back into the policy to increase its value.