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Whole Life Insurance (Permanent Insurance)

Whole Life is permanent insurance protection with a premium that remains fixed for the life of the policy. The death benefit is generally free from federal income tax, and the policy protects you for your whole life, from the day you purchase the policy until you die. Whole Life insurance can serve as a solid foundation upon which to build a long-term financial plan because it also provides protection for other important aspects in your financial life.

• Mortgage: Benefits can be used to help pay off mortgages and other debts in the event of a premature death.
• Estate preservation: Benefits can provide funds to cover estate expenses and help avoid the need to sell assets and or borrow money to cover these expenses.
• Retirement funding: Cash values can be accessed through policy loans or surrenders to supplement a retirement income. However, keep in mind that loans will reduce the death benefit.
• Charitable giving: A whole life insurance policy enables you to make a set donation to your favorite charity upon your death.

Generally after the first year, the policy begins to accumulate cash value, and it continues to build on a tax-deferred basis. You can leave this money in the policy and allow it to grow, or you have the option to use the money for other needs such as purchasing a home, funding your child's education or supplementing retirement income. The policy's cash value may be accessed through policy loans or withdrawals, but doing so will reduce the death benefit.

A Whole Life policy may also earn dividends, which can fluctuate from year to year. Dividends are not guaranteed, but when a dividend is payable, you may choose to take it in cash, use it to purchase more insurance or to pay or reduce your premiums.


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