Individual Whole life is a permanent type of life insurance. It describes coverage that is in place for life. Also referred to as individual full life insurance. As long as your premiums are paid, your beneficiary will receive the benefit amount upon your death.
Policy premiums for whole life are also guaranteed for life, meaning they stay the same throughout the life of the policy. Keep in mind that the younger you are when you purchase an insurance policy, the more affordable it will be.
The Whole life policy includes a savings portion, called the cash value, and growing cash value is an essential part of whole life insurance policy. alongside the death benefit. In the savings component, interest can accumulate on a tax-deferred basis. You would only be taxed if your withdrawals from the policy exceed what you put into it, and you have the ability to remove gains tax-free by taking a loan from the policy or leveraging. The dividends that a participating whole life policy pays are also tax-free as they are considered to be returns of premiums. The dividends can be taken out or reinvested.
Whole life premiums are fixed, based on the age of issue, and usually do not increase with age. In fact, as the years go by, the policy actually gets cheaper. This is because of inflation, which erodes the value of money. The insured party normally pays premiums until death, except for limited pay insurance policies that may be paid-up in 10 years, 20 years, or at age 65.
As you can see, Whole Life insurance policies can vary in options and limitations depending on the issuing company and are more complicated than Term policies. Analysis of your insurance needs and thorough market research is required. Contact our experienced team for a free consultation!