Having life insurance is an important decision, especially for those with dependents relying on their income. However, you may wonder what type of life insurance is right for you. Whole life insurance is just one of many insurance options to consider.
Whole life insurance is the most basic form of permanent life insurance. Unlike term life insurance, it will give lifelong protection, so long as the policy remains in force. In other words, the policy will lapse if premium payments are missed and the cash value exhausted (we'll discuss the cash value more later on). In exchange for paid premiums, the insurance company will pay out a death benefit in a lump sum once the policyholder has passed away.
Like other permanent insurance choices, whole life insurance comes with a cash value. Many policyholders use this feature for financial liquidity, saving for retirement, or other purposes. Some whole life insurance selections are “participating” policies, which means they receive dividend payments from the life insurance company. “Non-participating” ones are life policies which don’t get dividend payments.
Let’s go into the basics of whole life insurance, its features, and its potential roles in a financial plan.
