Life Insurance Types | Buying Life Insurance | Understanding Life Insurance | Glossary
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Whole Life Insurance as an Investment Option

Buying whole life Insurance as an investment can be much more than a retirement fund. Term life insurance which, as the name implies, must be renewed on a periodic basis, may not be a reliable method of providing for loved ones. At the time of renewal, medical exams can be required and premiums frequently increase. If health issues arise, the insurance company also has the option of refusing to renew or doing so at a rate many times what your previous policy cost you.

Whole Life Policies are Permanent

A whole life policy is permanent. It stays in force, most often with set premiums, for the life of the policy. As long as the payments are made in accordance with the contract, the policy will pay the full amount if the owner dies. In addition, whole life insurance dividends can help to reduce the premiums or be added to the cash value of the policy. The money paid for most types of insurance is gone forever unless a claim is made. The difference between those policies and whole life insurance as an investment is the ability of the policy owner to get money back. The money invested in a whole life policy can be used by the insured person during their lifetime, either by cashing out the policy after a set number of years or by borrowing against the cash value.

Acts as a Savings Account, If Needed

A whole life insurance policy can be used as a forced savings account. Many people have trouble maintaining a savings account; they start out with the best of intentions to save for the kid's college or for retirement, but emergencies arise and the money melts away. A whole life insurance investment can provide a secure way to save money for the future that requires payments to be made and, in a financial emergency, provides collateral for a possible loan instead of disappearing.

Whole Life Accumulates Value

There are several types of whole life insurance policies. Non-participatory policies do not pay dividends, they are simply a whole life insurance investment that provides secure coverage for the face value of the policy and an increasing cash value based on the payments made. A participatory policy will pay whole life insurance dividends, usually on an annual basis. These dividends can be paid in cash, applied toward reducing the premiums or used to increase the value of the policy. Payments on a whole life insurance investment policy can be set up in a variety of ways:

  • The policy can be purchased outright with a lump sum of cash. The policy is then in effect for the life of the insured person unless they choose to cash it out.
  • A policy can be designed to be paid in full over a set number of years, after which the policy remains in effect for the life of the insured person unless the owner cashes it out.
  • The payments can be made on a regular basis, at a guaranteed set rate, for the life of the insured.

Returns are Guaranteed

However the policy is set up, whole life insurance is a good investment. It may cost a little more than a term life insurance policy, but it offers a guaranteed return. Because it never requires renewal, a whole life insurance investment is a secure way to provide for the future. Unlike volatile stock portfolios, whole life insurance dividends will continue to increase the value of your whole life insurance investment as the years accumulate. To find out which whole life insurance investment is best suited to your needs, use an independent web site such as to get more information and free quotes from several companies at once. Use the form at the top of this page to compare rates from multiple insurers now.