What is Whole Life Insurance?



Whole life insurance provides a specific, guaranteed payoff at the death of the policyholder. Premium payments are fixed for the life of the policy and are guaranteed not to increase. A whole life insurance policy is another form of permanent life insurance and is meant to be maintained over long periods of time.


Whole life policies are best for those who expect to have life insurance needs long after their children graduate college or their home mortgages and other debts have been paid off. While these policies typically cost more than term insurance, they offer benefits not featured in shorter term insurances such as:


  • Cash value
  • Payment of dividends
  • The ability to borrow against the policy.


Whole life policies offer more options than their term insurance counterparts, but over time offer more value for the increased costs associated with maintaining them.


The Value of a Whole Life Insurance Policy


The face value of a life insurance policy is the amount of money your beneficiary will receive when the policy pays off at maturity. Cash value, also known as surrender value, is the amount of money available to you if the policy is surrendered or cancelled before its maturity or before the policyholder dies.


The cash value of your whole life insurance policy increases with each premium payment and can provide a good return on investment, depending on current interest rates and economic conditions. Contributions to the policy cash value are also tax deferred, much like retirement accounts.


Whole Life Insurance Dividends


A great feature of some whole life insurance policies is the ability to earn dividends on your paid premiums. Premium payments are treated much like other financial investments. When whole life insurance companies have had a good year financially, they will often return a dividend to their policyholders.


These returns, called dividends, can be reinvested to increase the death benefit or cash value of the insurance policy. It’s important to note that not every insurance carrier offers dividends on a whole life policy. This special feature offered through certain companies may end up costing the policyholder more than a standard whole life insurance policy.


Borrowing Against a Whole Life Insurance Policy


Whole life insurance policies have cash value and can therefore be borrowed against in a time of financial need. Interest rates and loan terms vary from carrier to carrier, but most insurance companies offer standard loans for the following occasions:


  • Down payment of a home
  • Education or tuition needs of children
  • Supplemental retirement income.


Contact us to see if you can save money on your insurance by speaking to a professional independent insurance agent at Journey Insurance.


Let us sift through the hundreds of insurance programs to find you the most competitive rates available.  Let us do the paperwork while you spend your time doing something you actually enjoy!


Journey Insurance Agency * Irvine, California * 888.323.7480


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