Cheap Life Insurance

Whole life insurance is just one type of life insurance available for consumers to choose from. Anyone can buy a whole life policy, but the question is, is it the best choice for you? Let's look at the reasons why a person might opt for a whole life policy versus term or universal.

There are three general kinds of family life insurance policies, term, whole, and universal. Inside each of those designations are multiple differences covering premiums, cash value, investment, and death benefit options. Whole life is easily explained as a policy that covers you from day one and keeps growing until you reach your maximum benefit. This means you would not lose your coverage if you live past a certain age, like term life, and it will continue to grow until it matures. Some of the reasons people might opt for this type of policy are to collect dividends, guaranteed maximum premiums, or because they own a business in partnership with others.

Dividends & Investment Options

Some whole life insurance policies accumulate a cash value over time. You pay premiums and a portion of that money increases the cash value of the policy while some goes to the investment arm of the policy. There are what is called, "Participating policies." If your insurer earns better than expected profits, you get a portion of that money returned to you. Depending on the policy, you may be able to choose to reinvest the returns, called dividends, back into the policy to increase the death benefit or take them and do what you wish with the money. This money is not taxable as it is considered a premium overcharge. You continue to pay premiums until the face value amount of the policy is paid. At that point the policy stays in place until your death.

If you are a small business owner and one of your business partners dies you could be left running a business with a disinterested heir of the past owner. A deal can be made among the partners to have a type of whole life policy on each partner along with an agreement that the proceeds of the deceased partner's death benefit will be used to essentially end the deceased partner's ownership in the business by using the proceeds of the policy to buy out the deceased partner.

Whole life can also be used to diversify an investment portfolio. The more your investments are spread out, the less risk you face. It is vital that your investments cover a wide swath of markets. A whole life policy will continue to go up until it reaches full maturity. It will not likely bring you returns as large as other riskier investments, but it is relatively safe. It can be a great place to accumulate a cash savings with a guaranteed return.

Your Choices

You have a wide variety of choices when it comes to choosing a life insurance policy. Each choice has its pros and cons. Whole life can be purchased for a reasonable premium that never rises. As you age you may even be able to increase your coverage without any additional medical testing. This could be a compelling reason for people with known family health problems they may have to face in their older years.

When you buy whole life insurance be sure to consider the many guarantees of permanent, inexpensive life insurance offered by reputable providers. You can compare each type of policy to your needs and situation. This way you can be sure to get the right kind of policy for you and your family.