There are 4 types of Permanent Insurance products, each have advantages and disadvantages. This will be a 4 part series discussing the high level difference of each product.
Whole Life is probably the most well know permanent life insurance product. And it typically gets a very bad rap. But Whole Life serves a particular market just like the others.
Like all permanent products, Whole Life is a policy that is designed to be in place for your entire life. Your premium payment is guaranteed not to change for the life of the policy. Furthermore, these policies also generate cash values based on the guarantees that a carrier provides in the contract. But these cash values can be greater if the insurance carrier performs well(low claims, investment returns, company performance)
There are a few guarantees that the carrier provides in a Whole Life Policy:
- A certain amount of cash value accumulation in the policy
- Fixed death benefit as long as the premiums are paid
- Locked in premiums, your premium cannot change.
Whole Life is a good fit for someone:
- With a need for Life Insurance
- Already maxing out of tax qualified investments(401K, IRA)
- Looking for a conservative investment return(4-5%) that does not fluctuate wildly(even in financial collapses)
- Needs a conservative place to store their money with guaranteed stable growth