Whole life insurance or “final expenses” insurance that is going to last until the client expires given that the required premiums are paid monthly, quarterly, or annually. Since this policy will last the client for typically a longer period time than a term life policy or any other life insurance policy the premium will be higher. You can take some comfort in knowing though that the premium will never increase no matter how long the policy is in force and also that the death benefit will never decrease. Most clients find that whole life is a great option to cover final expenses, meaning to pay for funerals, that last bit of debt they might have, or a bet they had with a buddy. Whole life policies with mature when the client expires or the age of 100 which ever time frame comes first.
Unlike the Term Life insurance policies, whole life policies will accumulate a cash value over time. If the cash accumulation gets high or you need cash without taking out a loan you can cancel the policy and receive the cash from the insurance company. This option isn’t recommended for clients who are in bad health due to the fact that getting another whole life policy will be extremely hard. There is a questionnaire process when applying for whole life insurance and the insurance company can look at your medical history and medications to make sure that you are a good candidate for a life policy.
Whole life insurance does have two types, participating whole life and non- participating whole life. Participating whole life insurance is a policy in which a company does well financially they give their clients a dividend check. Typically this dividend check will go toward paying up more life insurance vs the client receiving an actual check. Non participating life insurance is exactly what it sounds like, this policy you simply pay your premium knowing that the policy will and death benefit will be there once the client passes.
Another option with whole life insurance is the Single Premium Whole Life or SPWL. Typically clients who have had an universal life insurance policy or a participating whole life policy take the accumulated cash amount and move it to a SPWL policy. It a one time premium and the policy will typically add a few thousand dollars to the cash accumulation the client moves. The client will never make another payment on this policy.