Whole Life Insurance
Whole Life Insurance covers you for as long as you live if you continue to pay your premiums. A whole life contract also has the ability to build up a cash value account. All values related to the policy (death benefits, cash surrender values, premiums) are determined at policy issue, for the life of the contract, and cannot be altered after issue. Therefore, the insurance company assumes all risk of future performance versus the actuaries’ estimates. If future claims are underestimated, the insurance company makes up the difference through its reserves. There are two major types of whole life insurance policies, participating and non-participating policies. The main difference between these two types of policies is the way interest and or dividends are credited within the policy and whether the policy was issued by a mutual or stock insurance company. With a whole life contract, you generally pay the same amount or a level premium for as long as you live. When you first take out the policy, premiums can be several times higher than you would initially pay for the same amount of coverage using a term contract. However, they are smaller than the premiums you would eventually pay if you were to keep renewing a term policy year after year.
Informational purposes only.