Whole of Life Insurance - Advantages of Whole Life Insurance

Whole of life insurance is a type of permanent life insurance that is a very popular choice. There are many advantages of whole life insurance over that of temporary or term life insurance. Comparing whole of life insurance to term life insurance is comparing two different products, but to understand the advantages of whole life insurance, it is important to understand the shortcomings of term life insurance.

Whole of life insurance lasts as long as the policy holder wants it to. As long as the policy holder pays his premium on time, the policy cannot be canceled by the insurance company. The only exception to this is if the insurance company determines that the policy holder has committed fraud while completing the paperwork for the insurance policy.

Term life insurance differs from whole of life insurance in that it only remains in effect for a specific period of time. For example, the term policy may be two or five years. At the end of the term, the insurance company can decide not to renew the policy. Because life insurance is typically harder to purchase and more expensive the older you become, this means that each term of life insurance becomes increasingly more expensive.

Whole of life insurance has a cash value. You pay a fixed premium for your whole of life policy, and it builds value the longer you hold the policy. The value that is acquired through the whole life policy can be used by the policy holder. They can withdraw the money entirely or borrow it.

Term life insurance does not build value. You purchase the term policy for the specified period of time, pay your premium, and, assuming that the policy does not pay out, due to death, at the end of the term, you have nothing to show for your investment.

Looking at the choices above, it would appear that whole of life insurance has a clear advantage of term insurance. While whole of life is a solid choice for insurance, a quick look at whole life insurance quotes can help explain why some people choose term insurance. Whole of life insurance policies are typically more expensive than term insurance policies. To understand, it is important to realize the difference in the way the two types of policies are considered. Whole of life insurance is considered primarily an investment. Your regular payment of premiums ensures an increasing cash value in your policy. Term life insurance is primarily considered a protection policy. A term insurance policy protects your loved ones and pays out a specific dollar amount in the event of your death.

Once you understand these differences, it becomes easier to decide which choice is best for you. Someone with dependents and a medical condition, or someone with dependents and tight finances may consider the less expensive, but more restrictive, term insurance policy. For those who can afford the pricier whole of life insurance option, it is typically the better investment.