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What is Whole Life Insurance?

By Compuquotes Team on March 26th, 2008

If you are putting off the purchase of a life insurance policy because you are not sure what to buy, then you might be making a mistake that could cost your family big in the long run. That is why we are reaching out to educate you on life insurance, and help you make the decision that will keep your family safe for a lifetime.

If you are shopping around for life insurance, then words like whole, term, investment, and future are flying at you from all directions. Let us pin down one of these words right now, and explain what, exactly, whole life insurance is, and what it means to you.

Whole life insurance means insurance for your whole life. Your insurance will continue from the time that you buy the policy until the day that you die (or cancel it, or stop making timely payments on your policy). Term life insurance, on the other hand, is insurance that covers your life for only a specified period of time, at which point the benefits stop and you are once again uninsured.

This is well and good if you are only looking for a little extra until the kids go to college or the car gets paid off, but if you are concerned about the finances of your family for a lifetime, then start looking for a whole life insurance policy. The sooner you lock in a premium rate, the lower it will be for your life insurance policy. Whole life insurance typically features a steady premium that cannot be raised due to injury or illness as long as you continue to make payments.

Whole life insurance is also often described as an investment, since you can borrow against it over time. The actual money that you are borrowing (at rates determined by the insurance agency) is money that accumulates as a cash value of the policy over time. This money becomes available to you if you should choose to forfeit the policy for any reason. You can also earn dividends on some whole life insurance policies if the actual costs of the services provided are exceeded by the premiums that you paid. These dividends are not guaranteed, but can be a nice bonus if you are not expecting them.

Whole life insurance is sometimes called a great investment or an investment toward your retirement since you can borrow against monies earned, however there are better ways to invest your money if this is the only reason that you are considering whole life insurance. The reason that you should want to invest in whole life insurance is for whole life coverage, plain and simple. You may find that you can use the other features of your policy in the future, however you will not want to be forced to rely upon them. What you really want, just like the rest of us, is to be able to take care of your family, even after you are gone.

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