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Whole Life Insurance Policy Information

Whole life insurance policies provide lifelong protection and are known by a variety of names:

• Permanent Life Insurance
• Ordinary Life Insurance
• Standard Life Insurance
• Universal Life Insurance
• Adjustable Life Insurance
• Variable Life Insurance
• Survivor Life Insurance

As long as you pay the necessary premiums, the death benefit always will be there. These policies are designed and priced for you to keep over a long period of time.

NOTE: If you don't intend to keep your life insurance policy for the long term, usually fifteen years or longer, whole life insurance may be the wrong type of insurance for you.

Most permanent policies have a feature known as "cash value" or "cash surrender value." This is a feature which is not found in term insurance policies.

The cash values of many life insurance policies may be affected by your company's future experience, including mortality rates, expenses and investment earnings.

Keep in mind that with all types of whole life insurance policies, the cash value of a policy is different from the policy face amount. Cash value is the amount available when you surrender a policy before its maturity or your death. Provided the cash value is sufficient, the face amount is the money that will be paid at death or at policy maturity.

Advantages

• Premium costs can be fixed or flexible to meet personal financial needs.
• A whole life policy accumulates a cash value that you can borrow against. (Loans must be paid back with interest or your beneficiaries will receive a reduced death benefit.) You can borrow against the policy's cash value to pay premiums or use the cash value to provide paid-up insurance.
• The policy's cash value can be surrendered -- in total or in part -- for cash or converted into an annuity. (An annuity is an insurance product that provides an income for a person's lifetime or for a specific period of time.)
• A provision or "rider" can be added to a policy that gives you the option to purchase additional insurance without taking a medical exam or having to furnish evidence of insurability.

Disadvantages

• Required premium levels may make it hard to buy enough protection.
• It may be more costly than term life insurance if you don't keep it long enough.

There are several different types of whole life insurance. The major ones are described below:

Whole Life Insurance or Ordinary Life Insurance

Provides a lifetime guaranteed death benefit, a guaranteed fixed premium, and guaranteed cash values. These policies have the excess earnings (if any) of the insurance company credited to your cash value either as dividends or as excess interest. Similar to Universal Life plans, your cash values can be used to pay future premiums, fund retirement and college education, and provide emergency cash reserves.

Whole life typically provides the best investment rate of return per dollar of premium. In summary, whole life is for the person who wants guaranteed permanent coverage with a guaranteed premium for the rest of their life.

Universal Life Insurance or Adjustable Life Insurance

Is a flexible permanent product that allows a policy holder to design his own plan. You can adjust your premiums from year to year, increase or decrease your death benefit, and still accumulate savings with tax advantages. Universal life is a popular first time permanent policy for budget minded young families with changing needs. This plan is often used as a low cost, level premium alternative to term insurance when coverage is needed for many years. Since term insurance will eventually have increasing premiums and often requires requalification by passing a new medical exam, your term costs will ultimately become very expensive. On the other hand, universal life will give you the security of a guaranteed death benefit with a low, level premium.

Survivor Life Insurance (Second-to-Die)