Would your death leave your spouse or family with financial problems? You could consider purchasing life insurance coverage that will pay out a certain amount in the event of your death to help cover their needs. Here is some general information about whole life insurance.
A Whole Life Insurance Description:
This is a life insurance policy that can cover you for your entire life and not just for a specific period such as term life insurance. Your death benefit and premium will generally remain the same.
A whole life policy also builds cash value. This is a return on the portion of your premiums that the insurance company invests. Your cash value is tax-deferred until you withdraw it. You may also borrow against it.
Who Needs Whole Life Insurance?
If you are in need of life insurance the tax benefits and cash value of a whole life policy can be a bonus. A whole life policy will earn you tax-deferred interest near the market rate and will pay your beneficiaries a death benefit.
You may also consider purchasing a whole life policy if you require more tax-deferred savings than you have available. You can also get the life coverage you need if you can afford to pay the high premiums.
The Cash Value On Whole Life Insurance.
The cash value is what you could get if you cashed in your policy. If you decide to surrender your policy, your cash surrender value can be paid in paid-up insurance or cash.
The earnings on the cash value of a whole life insurance policy can be borrowed against in the form of a policy loan. The death benefit is reduced by the amount of the loan if the loan is not repaid.
Cashing Out A Whole Life Insurance Policy.
Cashing out a whole life insurance policy may be difficult owing to the surrender charge. The surrender charge is a charge which insurers remove out of the cash savings amount you have developed. This charge can be as high as 10% of the payoff value of the life insurance policy. It may stay in force for up to 20 years after you purchased the policy.
Borrowing Against Whole Life Insurance.
You may borrow against the guaranteed cash value of a whole life insurance policy in the form of a policy loan as long as the policy is valid. Just remember that borrowed amounts diminish the death benefit and cash surrender value of your policy.
The Best Whole Life Insurance Benefit.
There may be many different opinions regarding the best whole life insurance benefit. This can also be influenced by personal needs and circumstances.
Here follows 3 possible whole life insurance benefits:
Premiums are normally level and payable for life.
A quantity of the money you pay into your whole life policy collect as a guaranteed cash value.
A part of your life insurance premium may be returned to you as a dividend if real life insurance costs turn out to be less than was believed in setting the premiums.
That was some general information about whole life insurance.
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General Information About Whole Life Insurance
Saturday, July 17th, 2010Defining Whole Life Insurance
Tuesday, June 15th, 2010Whole life insurance may be sometimes be branded as permanent or ordinary life insurance. Here is a closer look at this type of life insurance policy.
A definition of whole life insurance:
* It is a life insurance policy that offers death protection for the insured person’s whole lifetime.
* An insurance payout is made to the contract’s beneficiaries when the contract holder dies.
* It includes an investment part which may gather a cash value that the policyholder can borrow against.
* It presents a withdrawal clause which allows the contract holder to terminate her coverage and collect the cash surrender value.
* The policyholder typically pays a level premium which does not rise as the person ages.
* The earnings on the cash value of the policy gathers tax-deferred.
* The insured person may borrow money against the policy’s cash value in the form of a policy loan.
Different types of whole life insurance policy:
* Single premium whole life insurance.
A limited payment whole life insurance policy with one relatively large premium payment due at issue. The policy is fully paid up and no further premiums are required. Due to the single premium payment the policy will have an immediate cash and loan value.
* Indeterminate premium whole life insurance.
An indeterminate premium whole life policy is similar to ordinary whole life plan of insurance except that it provides for adjustable premiums.
* Level premium whole life insurance.
Level premium whole life insurance features premium payments that are level and are required to be paid as long as the insured is living.
* Limited payment whole life insurance.
If you want to pay premiums for a limited time, the limited payment whole life policy gives you lifetime protection but requires only a limited number of premium payments. Limited payment plans can provide for the payment of premiums for a set number of years.
* Non-Participating whole life insurance.
A non-participating whole life policy has a level premium and face amount during your entire life. Since the policy is non-participating it does not pay you any dividends.
* Participating Whole Life Insurance
A participating whole life policy pays dividends. Dividends may be paid out in cash.
* Child whole life insurance.
Parents or grandparents may consider buying child life insurance. Child life insurance premiums are substantially less expensive. Child life insurance guarantees your child life insurance protection for the rest of their lives. However, you may want to be careful about using whole life insurance to support a college tuition.
Wealthy people may sometimes use whole life insurance policies as an estate-planning medium. They may set up an insurance trust to apply the earnings of the policy to their estate taxes when they die. That may save their inheritors the sizeable cost of settling the estate.
That was a closer look at the definition of whole life insurance and the whole life insurance policy. You may still want to find more specific answers about life insurance. I suggest you to look for the answers to your questions either online or feel free to ask your local life insurance company lawyer.