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To begin with, keep in mind that life insurance falls into two very wide categories: Whole life and term life. The basic difference between term and whole life insurance is this: A term policy is life coverage only. Most people only think about great online term insurance rates.

With a whole life policy, as long as one continues to pay the premiums, the policy will stay in force until you die. As the term applies, whole life insurance provides coverage for the whole life or until the person reaches the age of 100. Whole life insurance policies build up a cash value (usually beginning after the first year). You pay a fixed premium with whole life and the cost of insurance goes down, unlike a term policy. Also, whole life offers a guaranteed cash value that you cannot lose. In term and whole-life, the full premium must be paid to keep the insurance.

With level premiums and the accumulation of cash values, whole life insurance is a good choice for long-range goals. Besides permanent lifetime insurance protection, Whole Life Insurance features a savings element that allows you to build cash value on a tax-deferred basis.

The policyholder can cancel or surrender the whole life insurance policy at any time and receive the cash value. The guaranteed rate is the floor in some policies which offer dividends that rapidly accelerate cash value growth, depending on interest crediting rates and how the market performs.

The cash values of whole life insurance policies may be affected by a life insurance company’s future performance. Unlike whole life insurance policies, which have guaranteed cash values, the cash values of variable life insurance policies are not guaranteed. You have the right to borrow against the cash value of your whole life insurance policy on a loan basis. Supporters of whole life insurance say the cash value of a life insurance policy should compete well with other fixed income investments.

Unlike term life policies, whole life insurance provides a minimum guaranteed benefit at a premium that never changes. The earnings in a whole life policy are determined by the insurance company - which is based on the performance of their general account. In addition, while the interest paid on universal life insurance is often adjusted monthly, interest on a whole life policy is adjusted annually. Like many insurance products, whole life insurance has many policy options.

Make sure you can budget for whole life insurance for the long term and do not buy whole life insurance unless you can afford it. Be sure that you are getting all of the coverage you need now, while you’re young, and if you cannot afford whole life insurance, then you can consider good online term insurance. That is why whole life insurance policies have the highest premiums. It is insurance for your whole life, no matter when you pass on. The level premium and fixed death benefit make whole life insurance very attractive to some.

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