whole life insurance

http://gallery.bizhat.com/data/4787/...-insurance.jpg

What is whole life insurance?
A whole life insurance policy covers you for your entire life, not just for a specific period such as term insurance. Your death benefit and premium in most cases will remain the same. Whole life insurance also builds cash value, which is a return on a portion of your premiums that the insurance company invests. Your cash value is tax-deferred until you withdraw it and you can borrow against it.

What are the benefits of choosing a whole life insurance policy over other types of life insurance policies?
Unlike term life insurance, a portion of your premium money goes toward your cash value which in turn could pay off your entire policy only after a few years. Also, your premium will remain constant during the time you are covered unless you choose otherwise. And, unless you make a change to your whole life insurance policy, you have lifelong coverage with no future medical exams. Whole life is also a good choice because of the tax savings.

Whole life insurance is most suitable for you

* use it as a tax and estate planning vehicle,
* accumulate cash value for a child’s education or retirement,
* pay final expenses,
* provide money for a favorite charity,
* fund a business buy/sell agreement,
* provide key person protection.

Before buying the whole life insurance, you need to think carefully about choosing your level of coverage. Too often people make the mistake of insufficiently covering or even worse, financially overextending themselves. 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. 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 policy’s value by boosting both the total cash value and the death benefits,
* 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.

Keywords: tax and finance, whole life insurance, life insurance policy, tax savings