Whole Life Insurance is the most basic form of permanent life insurance, that includes an investment feature. Whole life benefits pay a fixed face value, while a portion of the annual premiums are put towards building cash value. All investment of the whole life policy are made by the insurance company, not the insured. The premiums are set at a fixed level, remaining the same throughout the period of the policy. When you pay the premium, a portion goes into investments that accumulate savings. These savings are passed onto the beneficiaries of the policy, along with the face value amount of the policy.
The insurance company takes into account many factors when determining the eligibility for a whole life insurance policy, some of which includes:
- Medical history
- Age
- Motor Vehicle History
- Risk Assessment
- Life History
Before deciding on whether a whole life insurance policy is best for you, consider what you need for the following:
- Having enough money to pay for final expenses (i.e. funeral costs)
- Having enough money to cover outstanding debts
- Having enough money to cover children’s education
- Having enough money to compensate for lost income
One of the benefits for choosing a whole life insurance policy is the fact that the premium will remain the same for the life of the policy, which is great for those on fixed incomes. Also, because the insurance company is controlling the investments, one does not need to be an investment guru to manage the policy.