A whole life insurance policy provides coverage for an insured's entire lifetime provided there is no default in premium. It builds cash value and guarantees a death benefit irrespective of when the insured dies.
Here are its main features …
1) It gives a fixed amount of coverage through the policyholder's entire life provided the policy remains active.
2) The premiums are usually fixed throughout the policy holder's lifetime provided the policy remains active.
3) Benefits are either payable on the maturity date (which is usually set at the policy holder's 100th birthday) or the death of the policy holder. Whichever comes first.
4) The face value is fixed once the policy is purchased.
5) Coverage can be increased only by: Buying an additional policy, dividends or additional riders to the original policy.
6) Cash value is accumulated and increases over the years from premiums paid.
7) The total amount accrued minus the total premiums is reported to as earnings. They do not usually attract any tax if you do not surrender the policy. However, if you do, you may owe taxes. To be sure ask a competent professional.
8) A policy holder may draw loans up to the amount of the cash value. Repayment of such loans is not compulsory. However, such unrepaid loans will reduce the death benefit paid. The insurance company will simply deduct the owed amount with the accrued interest before paying out the benefit.
If you've made up your mind on the best life insurance policy for you get it at the best price possible by obtaining and comparing quotes from insurance quotes sites. Your whole life insurance premium will be far less if you do this well.