Whole life insurance is known for its lifetime coverage, as well as its ability to grow funds in the cash value component of the policy. This type of coverage offers a guaranteed amount of death benefit for the lifetime of the insured (provided that the premiums are paid).
In addition, those who own a whole life insurance policy can also count on a premium amount that is fixed throughout the life of the policy. This means that the premium cannot increase - even as the insured ages - as well as if he or she contracts an adverse health condition in the future.
The funds that are in a whole life policy's cash value are allowed to grow on a tax-deferred basis. This means that there is no tax due on the gain each year, unless the money is withdrawn.
Cash value funds may actually either be withdrawn or borrowed by the policy holder and used for any need that they choose, such as paying off high-interest debt, supplementing retirement income down the road, and / or purchasing a vehicle or a home.
Some whole life insurance policies may also offer the ability to receive dividends. These dividends can be taken as cash, added to the policy's cash value component, or used for purchasing additional amounts of life insurance coverage. Because dividends are considered to be a return of excess premium, this money is not taxable to the policy holder.
Just like with any other product, though, not all whole life insurance policies are exactly the same. Therefore, it is important to compare your coverage and premium options with several different insurers prior to making your purchase decision.
By working with an independent insurance agent who has access to numerous life insurance carriers, you will be more easily able to review your alternatives in a non-biased manner, and from there you can determine which whole life insurance plan may make the most sense for you and your specific needs.