Whole Life Insurance

The main benefit and purpose of purchasing a Whole Life policy is to provide yourself with insurance coverage for final expenses and other goals during your entire lifetime.

Whole Life policies are very attractive because they provide guaranteed level premiums, payment terms and cash values. There is a saying in the life insurance industry; "You own whole life insurance and rent the term insurance."

A whole life policy builds up a cash surrender value over its lifetime which is paid out to the policyowner upon the cancellation of the policy. Cash values can be borrowed during the life of the policy as a loan. The cash surrender value can also be used to pay premiums, to purchase a paid-up policy with a reduced face amount, or to continue the policy for an established period as term insurance

Advantages

Whole Life Insurance remain in effect as long as policyholder continues to pay the premiums. Therefore, for any risk that has no predictable expiry date, whole life insurance provide guaranteed amount of money to address the risk.

Whole Life Insurance accumulates cash surrender value.

If the policyowner fails to pay the premiums the non-forfeiture provisions can be used to keep the policy in force.

Disadvantages

One disadvantage of a whole life insurance policy is that the premiums for a similar amount of coverage for applicants of the same age are considerably higher than the premiums for a term life insurance policy.

In the event of death of the insured the beneficiaries receive the face amount of the policy, but not any cash values that may be in the reserve.

Participating and Non-participating whole Life Insurance

The policy owner of a participating whole life insurance policy may receive a policy dividend periodically, whereas the owner of non-participating life insurance policy will not. In simple language, the owner of participating policy is entitled to share in the insurance company's distribution of any of the company's surplus.

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