Whole life insurance is a type of permanent life insurance that provides coverage for your entire life, as long as you continue to pay the premiums. Unlike term life insurance, which only covers you for a specific period, whole life insurance is designed to last for your entire lifetime.
Here are some key features of whole life insurance:
- Lifetime Coverage: As long as premiums are paid, the policy remains in force and will pay a death benefit to your beneficiaries upon your death.
- Fixed Premiums: Premiums are generally fixed and do not increase as you age.
- Cash Value Component: Whole life insurance policies build cash value over time. This is a savings component that grows at a guaranteed rate. You can borrow against the cash value or even use it to pay premiums.
- Dividends: Some whole life policies, especially those from mutual insurance companies, may pay dividends. These are not guaranteed, but if they are paid, they can be used to reduce premiums, buy additional coverage, or be taken as cash.
- Guaranteed Death Benefit: The death benefit is guaranteed as long as premiums are paid and the policy remains in force.
Whole life insurance can be more expensive than term life insurance due to its lifelong coverage and cash value component. It can be a good option for individuals looking for a policy that provides lifelong protection and a savings component, but it’s important to carefully consider if it fits your financial goals and needs.