However, If You Decide To Quit Your Policy, Your Cash Value Can Be Paid In Cash Or Paid Up Insurance

Category: Finance, Financial Planning.

Whole life insurance, also known as cash value insurance is a basic and consistent type of permanent life insurance which remains in effect your entire life at a level premium. A portion of your premium goes into a reserve fund called cash value that builds up over the years your policy is in affect.

This life insurance is a good choice for you if you do not expect your life insurance needs to diminish over time. Your reserve fund is tax deferred and you can borrow against it, until you withdraw it. You may also have the option of a single premium paying all of the premiums at once with a single lump sum. The premiums must generally remain constant over the life of the policy and must be paid periodically according to the amount indicated in the policy. Your cash values will grow to equal the amount of the death benefit when you turn to age 10 Although, whole life insurance is very expensive, and if you are on a limited budget, you may not be able to afford all the insurance coverage you actually need. Also death benefit will never decrease if you do not borrow against it. But the plus point is that the death benefit is guaranteed as long as premiums are met.

Whole life insurance policys returns will fluctuate with the markets and will usually follow returns available from other investments like equity mutual funds. Whole life insurance is most suitable for you, if you want to use it as a tax and estate planning vehicle, accumulate cash value for a childs education or retirement, provide money for, pay final expenses a favorite charity, fund a business buy and sell agreement and provide key person protection. However, if you decide to quit your policy, your cash value can be paid in cash or paid up insurance. Before buying the whole life insurance, you need to think carefully about choosing your level of coverage. This would be a tragic error with whole life insurance policy because defaulting on premium payments can mean policy cancellation and the loss of your entire investment. Too often people make the mistake of insufficiently covering or even worse, financially overextending themselves. So be careful and make sure you pick a life insurance policy that has a guaranteed cash value starting at the very first year, choose the one with the highest cash value in the very first year, consider participating insurance policies which can pay dividends, increasing your policys value by boosting both the total cash value and the death benefits, and beware of any insurance policy that levies surrender charges when you cancel.

If you ever need to stop paying premiums, your policy lets you use the accumulated cash value of the life insurance policy to pay the premiums, thus keeping your coverage current.