Whole Life Insurance

Whole life insurance differs from term life insurance in that it covers you for your whole life. Essentially, if you continue to pay your premiums you will receive the benefits of your life insurance policy in the event that you pass away. There is no fixed term of coverage – if you die and have a whole life insurance policy you will be covered fully. Sometimes whole life insurance can be known by more than one name. For example, it can be referred to as: permanent, ordinary, standard, universal, adjustable, variable or survivor life insurance. If you know the different names for this type of insurance it will be easier to understand what your insurance company means when you discuss the different options that are available to you for coverage. One big difference between term life insurance and whole life insurance is the fact that whole life insurance has rates that may vary from those of term life insurance because of the longer coverage period provided. The type of coverage, as well as the price of coverage, is a reflection of the extended policy coverage. The only time a whole life insurance policy is not beneficial is if you require shorter term coverage, usually less than 15 years. In this case you should apply for term life insurance.

What else does whole life insurance offer?

Whole life insurance also offers something called “cash value” or “cash surrender value.” This is not an option that is included in term life insurance, as it is a policy that expires after a set period of time anyways. With whole life insurance, however, you can receive a “cash value” amount if you surrender the policy before its maturity or your death. Depending on how much time has elapsed, you can receive a decent sum of money at the time of the policy termination. Of course, the “face amount” is the amount of money you would receive at your death or when the policy reaches maturity, which will differ from the amount you receive if you opt for a premature discontinuation of the policy.

Advantages

There are several advantages to whole life insurance. For one, the cash value of the policy can easily be converted into cash or an annuity. In addition, you can attach a provision, or “rider,” to your policy that allows you the option to buy added insurance without having to take another medical examination or provide evidence of insurability. This can be extremely advantageous if you wish to buy more insurance without the added time of going through all the initial application requirements a second time over.