Whole Life Insurance


What is whole life insurance?
A whole life insurance policy covers you for your entire life, not just for a specific period such as term insurance. Your death benefit and premium in most cases will remain the same. Whole life insurance builds cash value based on company dividends, it also provides guaranteed cash values, which are contractual, not based on company dividends. Cash values grow tax-deferred and can be collateralized and borrowed against for emergencies or opportunities and other acquisition purchases. It is an excellent way of utilizing a “private reserve strategy”. The cash value reserve that is being collateralized against for a loan, continues to grow with uninterupted compounding, while the borrowed funds are used for other purposes. This is a very efficient financial strategy which allows for maximium control  and flexibility of loan repayments and is an efficient way to access money, i.e. be your own banker.

Are there choices within whole life insurance?
Yes, the most common choices include traditional, interest-sensitive, and single-premium whole life insurance policies. A traditional whole life insurance policy gives you a guaranteed minimum rate plus additional cash from from company dividends. An interest-sensitive whole life insurance policy gives a variable interest rate on your cash value portion, similar to an adjustable rate mortgage. Single-premium is for someone who has a larger sum of money and would like to purchase a policy up front, without future premiums. Like other whole life insurance options, single-premium whole life insurance accrues cash values and has the same tax advantages as other forms of whole life insurance (unless Modified Endowment rules apply).

What are the benefits of choosing a whole life insurance policy over other types of life insurance policies?
Unlike term life insurance, a portion of your premium build cash values, which can create a private reserve strategy and provide access and flexibility for use during one’s lifetime. Also, your premium will remain constant during the time you are covered unless you choose otherwise. And, unless you make a change to your whole life policy, you have lifelong coverage with no future medical exams. Whole life is a good choice because of the tax advantages, the ability to use as collateral for a loan while continuing to grow tax free, and providing creditor protection and avoidance of probate features.