Whole Life Insurance
Life insurance provides the plan holders’ beneficiaries with a lump-sum death benefit payment once they pass away. Whole life insurance provides you with permanent coverage that lasts for the entirety of your lifetime, while term-life insurance only lasts for a set period of time. In order to maintain a whole life policy, you will need to pay monthly premiums for as long as you are alive.
What Is Whole Life Insurance
Whole life insurance policies are long-term contracts that guarantee a death benefit upon the policyholder’s death. They also have a cash-savings component that can be drawn from if needed. As you make premium payments, your insurance policy will grow in value, making it a source of equity that grows over time.
Cash Value Of Whole Life Policies
Whole life insurance policies eventually grow cash value, which can be used to take out loans. If you do decide to take a loan from your policy’s equity, you will have to pay it back before you die. Otherwise, the remainder of the loan will be deducted from your death benefit before it is paid out to your beneficiaries. Fortunately, withdrawals of funds that are within the total value of premiums paid are tax-free.