Understanding Your Whole Life Insurance Policy

By Compuquotes Team on March 26th, 2008

It is safe to say that the majority of Americans put off buying life insurance and tell ourselves it is a luxury when in reality we are just too scared to think about planning for our death. The sad part here is that when you don't plan for your family's financial security they may be left in a hot money situation when they are in the grieving process. The solution may be a whole life insurance policy.

There are literally hundreds of companies each offering several different types of life insurance, so it is completely expected to be lost and confused when it comes to what the different policies mean. In the most basic form a life insurance policy will pay out a lump sum when the policy holder dies in order to help your family pay expenses such as mortgage, and electricity,

With whole life insurance there is not a specific term. It doesn't matter whether you die in one year or if you are 85, a whole life insurance policy will protect you. There are actually several types of whole life insurance which is also referred to as permanent life insurance, such as traditional life, universal/adjustable life, variable life and universal/variable life.

Universal/Adjustable life insurance is close is some ways to traditional life but gives the policy holder more flexibility. For example it is easier to raise the amount of your death benefit and there is a cash value account included which is a form of a savings account which earns interest and can even lower your premiums.

A variable life insurance policy comes with a death benefit and a cash value account that you have the ability to make investments with. You can make investments in stocks and bonds. If your investments succeed then you will increase your death benefit, but this is a risk. If you made a poor investment your death benefit may be lowered instead.

Variable/universal life insurance is both variable and universal policies combined into one policy, so you are left with a cash value that you can make investments with. You can also increase or decrease your death benefit with these investments so choose wisely.

When you are in the market for life insurance make sure you perform a great amount of research and are able to make an informed decision as to what type of policy and coverage you and your family will need. There are so many different policies that are catering to every different need there is, you simply have to be willing to put in the time and effort to find a reputable company with a great offer.

Make sure you weight the differences each type of life insurance offers, so you can decide which type is best for you. Remember that term life insurance only covers you and pays a death benefit for a specified amount of time. The majority of term life insurance policies are basic and don't offer any special features. If you want features, go with a whole life insurance policy.

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