Permanent Life Insurance / Whole Life Insurance

Whole life insurance is the most common and consistent permanent life policy. With whole life insurance both the premium and the death benefit remain fixed throughout the policy’s life.

The whole life insurance, like the other permanent insurance types, carries a cash value. The cash value is invested by the insurance company, which means that the investment is quite conservative, and the return you receive is not big. The lack of involvement in investing the cash value is considered by many to be the main disadvantage of whole life insurance when compared to other permanent insurance types. You can still use the cash value as premiums, borrow against it, or save it.

Some whole life policies pay dividends. Dividends can be used to refund part of your premium.

The most popular variation of the whole life insurance policy is the limited pay insurance. If you like the security of the whole life policy but don’t want to pay premiums for the rest of your life, this variation is for you. The limited pay policy payments end when you reach a specified age. Individual premium amounts, however, are higher because of the shorter time period. Coverage stays the same as with the standard whole life policy. In an extreme case of the limited pay insurance you pay just one premium. The value of this premium can be thousands of dollars.

Whole life insurance is appropriate for people with limited investment experience who would like to have permanent life insurance.

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