RESOURCES - Life - Whole life
Overview

Whole life insurance provides lifetime insurance coverage with certain guarantees. One of the major appeals of Whole Life Insurance is that it guarantees a minimum death benefit no matter how long you live assuming the premiums are paid each period.

• The insured pays a fixed premium, guaranteed, for the life of the insurance contract.
• You are guaranteed to receive the policy’s minimum cash value and a guaranteed minimum death benefit.
• Dividends, which are not guaranteed, can increase your cash value and death benefit above the guaranteed minimums.

Potential Advantages

• Premiums are fixed and allow the client to plan cash expenditures accordingly.
• The discipline of fixed premiums can eliminate the potential to skip a premium payment, which can result in policy funding problems.
• Dividends are not guaranteed but can be used to reduce the policy owner’s net cost.

Potential Disadvantages

• You can’t increase or decrease the face amount of your policy. Additional coverage requires the purchase of another policy, additional costs, and evidence of insurability.
• Cash accumulation within the policy is very limited.