Whole Life Insurance

Whole life insurance is a type of permanent life insurance that provides lifelong coverage, a guaranteed death benefit, and a cash value component that grows over time. 

Premiums are fixed and remain consistent, ensuring the policy is active for your entire life as long as payments are made. 

The cash value is tax-deferred and can be accessed through withdrawals or loans during your lifetime, although this will reduce the death benefit. 

 Key features of whole life insurance

• Lifelong coverage: The policy is designed to last your entire life, offering permanent financial protection for your beneficiaries. 
• Fixed premiums: The premium amount is set at the start of the policy and does not increase over time. 
• Guaranteed death benefit: The death benefit is guaranteed to be paid to your beneficiaries as long as you pay the premiums. 
• Cash value: A portion of each premium payment goes into a cash value account that grows on a tax-deferred basis at a guaranteed interest rate. 
• Access to cash value: You can borrow against, withdraw from, or surrender the policy for its cash value, but doing so can reduce the death benefit. 
• Potential dividends: Some policies, particularly those from mutual insurers, may pay dividends. 

Uses and considerations

• Uses: Whole life insurance is often used for permanent needs like estate planning, covering funeral expenses, or providing for a surviving spouse. 
• Cost: It is generally more expensive than term life insurance due to its permanent nature and cash value component. 
• Complexity: While simpler than some other permanent policies like universal life, it is more complex than term life. 
• Flexibility: You can take loans or withdrawals from the cash value, but you should be aware of potential tax implications and how it affects the death benefit. 

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https://www.investopedia.com/terms/w/wholelife.asp