How to Shop for Whole Life Insurance

By Compuquotes Team on July 20th, 2009

Whole life insurance plans are much more complicated than term life plans, so the process of finding one can be confusing. Since the insurance company is obligated to pay out benefits on a whole life plan, the terms of the contract can be much more restrictive.

This can all seem a little overwhelming for those who are looking to buy whole life insurance. The best way to start looking is to become familiar with common terms and procedures. Then start considering factors such as budget, coverage amount, and additional benefits.

Understand the Basics
Term life insurance plans are relatively inexpensive because there is usually little chance the company will have to payout on the policy. Since whole life insurance is coverage for life, the company will be required to make payments out at some point. While term life insurance is a stopgap solution for a tragedy, whole life insurance is more of an investment plan for loved ones. It is important to keep this investment aspect in mind when searching for a whole life plan.

Most of the premiums are used for safe, yet slow, investment strategies, so the policy will usually not mature for a few decades. This is because the insurer requires that their fees and charges be covered before the insured can see significant gains. One of the real advantages over term life insurance, though, is the accumulation of benefits over time.

Check for Extras
Some policies include extra options for the insurer that make the commitment to the policy much easier. For instance, some companies allow policy loans. The insured can take out money against the policy depending on how much it has matured and pay it back over time. This money does accrue interest like any other loan, but the terms are much more reasonable because the policyholder is borrowing their own money. This is why many whole life plans are called forced savings plans.

Some insurers return portions of premiums if the plans is doing better than expected; this is rare, but it can be a nice surprise. Also, some policies will offer spouse discounts and additional offers.

Consider the Options
Whole life insurance is not for those looking to make a short-term investment. The process of building up the policy takes a long time and costs much more than term life plans. However, whole life plans may be the best option for those looking to start an investment or those who are unable to purchase a term life plan because of poor health or their age. When looking at permanent plans, first gather investment information and quotes from several companies.

Those who are not well versed in investment lingo and finance may want to have a third party look over the options for them. There is no right or wrong plan for everyone. Which plan will work best depend on the age, income, health, and family of the applicant. Those who are not sure of their insurance needs may want to meet with an independent insurance agent and discuss a plan. It is not impossible to shop for whole life insurance on one's own, but it does require some understanding of investment, a few hours, and a calculator.

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