Whole Life Insurance

Whole life insurance can be compared to term life insurance, but it comes with more benefits. You can actually accumulate funds in a cash value account by investing a part of your premium into that account. Whole life insurance can be broken up into three categories: traditional, interest‐sensitive, and single‐premium.

Traditional

This type of whole life insurance policy will guarantee you a minimum interest rate on your cash value account.

Interest-Sensitive

With this option, you will be given a variable rate rather than a minimum one on your cash value. Interest‐sensitive is more flexible, as you can increase the amount of your death benefit without paying extra for the premium, but only if the market trends on which they rely suit you.

Single-Premium
This option is really for those who can afford high‐premium life insurance. It has the same types of benefits that the other whole insurance policies do, but is more costly.

Advantages over Term-Life

Whole life insurance has many benefits that term life insurance cannot offer. Besides the cash value that you can use for a premium payment later on, your premium is fixed as long as you do not make any changes to your policy. In addition, after you have taken the initial medical exam required to get this type of insurance, you need not take another one for the rest of your life.

Although this policy comes with cash value accrual, it is still better to look elsewhere if you want an investment that will pay out big in the future. The interest rate is usually very low and should be considered as more of an insurance policy than an investment.