Whole Life Insurance Policy: What it is and How it Works

Do you want to purchase a whole life insurance policy but don’t know what it entails? Well, lucky you. This article is everything you need to know about a whole-life insurance policy. Follow this article to check important information before buying your insurance policy.

What is a Whole Life Insurance Policy?

Whole life insurance, also called traditional life insurance, is permanent life insurance. It provides permanent death benefit coverage for the insured as long as premiums are paid on time.

This insurance provides different types of guarantees that can be appealing to an individual who does not want guesswork after buying life insurance.

Furthermore, a whole life insurance policy represents the contract between the insurer and the insured. As long as he or she meets the contract term, the insurer will pay a death benefit from the policy to the insured beneficiaries when the insured dies.

How Does it Work?

This life insurance covers you for the rest of your life. And it also includes a cash value component that enables you to tap into it while you are still alive.

A whole-life policy is more expensive than term life insurance. And the reason is that people with a whole life insurance policy are guaranteed to have a death benefit when they pass on.

Whole life has three components: life insurance, cash value, and premiums. It offers premium payments that won’t go up or rise.  Also, a guaranteed death benefit that won’t go down anytime, any day, and a minimum rate of return on the cash value

How Does the Whole Life Insurance Cash Value Benefits Work?

Just like I have mentioned many times, Whole Life policies are one of the insurance plans that help build cash value. The cash value is generated when the premiums are paid.

In other words, the more premiums you pay, the more cash value you have. One of the best parts of the cash value is that it can be withdrawn in the form of a policy loan.

As long as you repay the loan and the interest, the policy’s full coverage amount will be given to your beneficiaries when you die. If you don’t pay the loan, the death benefit will be reduced by the outstanding loan balance.

How Much Does it Cost?

Although whole-term life insurance has lots of features and sounds appealing, it is expensive for many people. Many people look at the term life and what insurance costs, but they should know that the policies are different.

You can get whole-life insurance quotes from insurance companies and check out the price. There are lots of companies that offer the policy; just make sure you shop around and get the best quote.

However, you need to know that the cost of the insurance varies and is based on many factors, such as occupation, age, and health history.

Important Factors Affecting Whole Life Insurance premiums

The coverage amount you chose will help you know your rate, along with:

  • Weight and height
  • Gender and age
  • Credit
  • Criminal history
  • Current and past health conditions
  • Substance abuse
  • Diving record
  • Dangerous hobbies and activities
  • Drug use and abuse

How to Get a Whole Life Insurance Policy

Applying for a Whole Life Insurance policy depends on the insurance company you have selected to run your policy or quote with. While most insurance companies allow you to start your application process online,

Others require you to contact an agent before starting your application. You can only get this information by visiting your preferred insurance company’s website online.

Once you first apply for the coverage, your premium and your coverage amount will be based on your gender, age, and health. As long as your premiums are paid, your whole life policy is in effect, and nothing will change regardless of your age or health.

Unlike term insurance, your whole life policy cannot expire. In other words, it will stay in effect until it is canceled or you pass away. After a few years, the premiums paid into the policy will start to generate cash value, which can be used under certain conditions.

The cash value can be used to cover your insurance premiums or withdrawn in the form of a loan. However, all the loans must be repaid before your death or will be deducted from your death’s benefit.

Best Whole life insurance Companies

To purchase your Whole life insurance policy, you can get quotes from any of the below companies:

  • State Farm Life
  • Guardian
  • MassMutual
  • Guardian
  • AARP
  • Northwestern Mutual
  • New York life
  • OneAmerica Financial
  • Penn Mutual
  • CUNA Mutual
  • Geber Life insurance Co
  • Mutual of Co

This insurance is a product that has some uses; however, it is not for everybody. Make sure you purchase the policy from a company that offers amazing and additional benefits. Get whole-life insurance quotes today and protect your family for the future.