What are the benefits of whole life insurance?


Although whole life insurance is the most expensive and the least flexible of all life insurance options, it is by far the best choice of life insurance for those looking for permanent lifetime protection. You might find the premium rates a bit steep at first, but you and your family are guaranteed to experience the benefits of owning a whole life policy in the long run.

Here are some of the advantages of whole life insurance:

  • The first and most important benefit is that whole life insurance provides protection for your whole life, as long as you keep paying the premiums, and unless you decide to cash the policy in.
  • Another asset of whole life coverage is that the premiums are level and that they remain fixed for life. Their rates might look a bit prohibitive in the early years since you do not have the privilege to decrease them, but again, in the long run, this condition will prove favorable, because the premiums will stay the same as you age, regardless of your health and other external factors.
  • If you purchase whole life insurance in the early years, the cash value element you are entitled to can build up considerably in 20 or 30 years, providing a nice lump sum for investment on a tax-deferred basis. You can then decide to invest the cash value, choosing between a whole range of options. Provided that there's enough money accumulated, you can borrow it as a policy loan, surrender the policy for it, invest it in an education fund for your children, use it to pay or reduce your premiums or as a collateral for a bank loan. Don't forget that the interest that accumulates is tax-free until you draw the cash value out.
  • Last but not least, if you own a participating whole life policy, you are entitled to dividends which the insurer can pay off if they have had a favorable financial year.
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