Whole life insurance coverage, unlike term life insurance, remains in effect for the policyholder's entire life. Depending on the precise product chosen, premiums may be paid monthly for life, paid in full as a "lump-sum" upfront, or paid for a set number of years.
While whole life covers a death benefit, there are other advantages to whole life insurance as well. The insurance company typically guarantees that the cash value will continue to increase regardless of the company's profitability. The cash values are typically considered a liquid asset that can be used as collateral. In addition, most policies allow the holders to borrow against them, with the death benefit reduced to offset the loan. Some policies also have a surrender value, which allows the policyholder to cancel their whole life insurance coverage for a single payout during their lifetime.
Like all life insurance products, there are certain situations in which a company may refuse to pay a death benefit on a whole life coverage policy. There is a long-standing law that a criminal cannot benefit financially from his crime, so a beneficiary cannot collect on a policy if he is responsible for the policyholder's death. Some policies exclude death by suicide, while committing a felony, or as a member of the armed forces. There may also be a two-year exclusionary period during which payment may not be made or may be limited to a refund of premiums. If there was any material misstatement on the policy application, that is also grounds for denying the claim, but such denial may be limited to the first two years of the policy's life. Deliberate fraud is also grounds for refusing to pay a death benefit. No single agent or broker handles all product lines and all insurance companies. Those seeking whole life insurance coverage should compare quotes from several different companies before selecting a policy. LifeInsuranceRates.com can make the comparison quickly, returning a number of possible options for further investigation. Use the form at the top of this page to compare offers now.