What Are the Pros and Cons of Whole Life Insurance?
Most people are familiar with whole life insurance. For many years, whole life policies were the predominant type of life insurance sold in America. When you purchase a whole life policy, you traditionally pay a fixed premium for as long as you live or for as long as you keep the policy in force. In exchange for this fixed premium, the insurance company promises to pay a set benefit upon your death. In addition to providing a death benefit, a whole life policy can build cash value. Part of the premium pays for the protection element of your policy, while the remainder is invested in the company’s general portfolio. The insurance company pays a guaranteed rate of return on the portion of your premium that is in its investment portfolio, building up the value of your policy. Guarantees are contingent on the claims-paying ability of the issuing company. This buildup in cash value is part of the reason the premiums on a whole life policy generally remain fixed instead of escalating to matc
