Whole life insurance provides insurance coverage for your entire life. The amount that’s insured is paid to the family dependents following the policy holder’s death. This policy is costly because it’s guaranteed that the life insurance group will ultimately need to pay the insured sum. The insurer invests the monthly insurance payments into a life fund.

Whole life insurance is permanent life coverage, signifying that it lasts your whole lifetime. In most cases, the premiums do not change, and the death benefits remain the same even though you may suffer from serious health problems. Though costlier than term coverage, it is extremely popular.

This policy covers you for your entire lifetime unlike for a specific period such as term insurance. This type of coverage also builds cash value, which is a return on a portion of your premiums which the insurance company has invested. Whole is the opposite of term. As it has a cash value, you are actually investing in a plan that can give you a cash flow in later years.

Premiums are generally level and payable for life: Since premiums are constant, it will be beneficial to you if you purchase this policy when you are younger and the annual premiums are bound to be less expensive.

The rate of return on a whole life insurance policy is very low as compared to other investments. Many people would agree that insurance coverage should not be used solely as a mode of investment. However, if you are in need of such coverage, the tax benefits and cash value would be an added bonus while purchasing protection for your loved ones.

Whole life insurance policies can earn dividends. When this happens, some of the insurers may return a portion of the premium paid to you as a dividend. However, it can be mentioned here that dividends are not guaranteed. Whole life policies provide protection throughout one’s lifetime. A financial cushion is provided for the kith and kin in case the policy holder dies.