If you want to avail life insurance protection throughout your life, merely buying a whole life policy is not sufficient. You have to pay your premiums on time. A life insurance policy is a contract between the life insurance company and the insured. The life insurance company will pay death benefits to the beneficiary of the policy on the death of the insured in return for regular payment of premium by the insured. This means that if the premium is not paid, the contract will be void. Your life insurance policy will lapse and you will not have protection.
Now if you are looking for life long protection and also investment beyond protection, you should consider whole life insurance. Whole life insurance is a subcategory of permanent insurance. A whole life insurance policy is one can keep for as long as you live and that will pay the face amount to your beneficiaries. The only prerequisite is that you should pay your premiums on time.
Some main characteristics of whole life insurance are:
1. Uniform premium rates – The premium rates are generally constant. Like with any life insurance policy, if you want to get a whole life insurance policy, you should get it when you are young. This is because younger people generally pay less for life insurance. Since a whole life policy is one that you will be keeping for your whole life, you will be required to pay the premium for a very long time. So if you start early, you pay a lower premium. Premiums lock in at whatever age you apply for the rest of your life.
2. Pay up the policy – Whole Life insurance potentially allows you to “pay up” your policy. This means that at some point in the future the insurance company may project enough current and future dividends and cash value to allow you to stop paying premiums while still keeping your policy active.
3. Cash value – Whole life insurance policies have a cash value. you can borrow money against the cash value of a whole life insurance policy, if there is sufficient cash value in the policy to secure the loan. The amount of such loans will be decided on the basis of your policy amount and premiums. But you have to remember one thing. Cash value added to the death benefits. So when you withdraw money from the cash value, the death benefit will decrease.
