Whole life ins. is permanent life insurance coverage that lasts as long as you live and continue to make on-time premium payments. The choice of a whole life policy is a long-term investment that needs to stay in place for at least 15 to 20 years to realize a return on your investment.
Are you considering purchasing whole life, life ins. that accrues a cash value over time? This Web site can be a valuable resource in your search for just the right insurance plan. Whole life insurance differs from term life insurance in that you are paying towards a life ins. policy as well as an investment vehicle.
The investment can take many forms such as bonds, stocks or even money market accounts. The life insurance policy builds cash value, assuming you pay your monthly premiums, which you can borrow against. The similarities between whole and term life are that you can lock in the same monthly payment over the life of the policy but term life is paying for a death benefit policy alone.
Whole life insurance plans are expensive but you need to remember that you are paying for both a life insurance plan and an invest vehicle. Some agents categorize this type of insurance as a 'retirement plan' but the cost of high fees and commissions, which can reduce your annual return by 3%, make them less viable as a cost-effective investment option.
The three most common types of whole life are:
- Traditional policies
- Universal policies
- Variable policies
With a whole life policy it can be harder to keep track of where the premiums will go-into fees, insurance or investments. Typically, all of the first year's premiums will be eaten up by up-front, yet hidden commissions. It literally takes an expert to tell you if the whole life policy you are considering will ever present itself as a decent investment. It can take years or more for a whole life policy to ever realize a meaningful return. Keep this in mind when you are considering cashing out your policy. If you have held onto it now for 10 years or so you could lose more money than if you just let it sit for another 5 years.
Whenever you are researching whole life insurance be sure to check out the insurer's ratings. If you find that a particular insurance company has shown some signs of financial weakness you might want to consider a different company altogether. The soundness of the insurer will make all the difference in whether you receive a pay out 20 or 30 years from now.