Whole life insurance4/20/2023 ![]() Whole life covers the entire life of the insured. The death benefit can help ensure they don’t have to dip into their savings or investments to handle your final arrangements. Rather, you should view whole life insurance as a safeguard that protects your loved ones from experiencing a financial burden when you pass. While life insurance is also heavily regulated, its regulations have little to do with the financial sector. True investments are heavily regulated and have safeguards in place to protect investors. ![]() While whole life insurance policies act as an investment vehicle of sorts because of the cash value they accrue, you shouldn’t view any type of life insurance as an investment. What Is Whole Life Insurance as an Investment? All loans must be repaid before you pass or they will be deducted from the policy’s death benefit. Cash value can be withdrawn in the form of a loan or it can be used to cover your insurance premiums. Over time, the premiums you pay into the policy start to generate cash value, which can be used under certain conditions. The policy will stay in effect until you pass or until it is cancelled. Unlike term insurance, whole life policies don’t expire. They will be higher than the premiums of a term life insurance policy because your entire lifetime is built into the calculation. When you purchase the policy, the premiums will be locked in for the life of the policy as long as you pay them. As long as you pay your premiums, your whole life insurance policy will stay in effect and your premiums will remain the same regardless of health or age changes.įor example, let’s say you buy a whole life insurance policy at age 40. You’ll choose your coverage amount, and your premium will be calculated based on your age, gender, and health. When you first apply for coverage, you are agreeing to a contract in which the insurance company promises to pay your beneficiary a certain amount of money – called a death benefit – when you pass. It’s guaranteed to remain in force for the life of the insured as long as the premiums are paid. ![]() Whole life insurance is a permanent life insurance policy. ![]()
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