Whole life insurance policies are permanent policies. This means that the whole life insurance policy must be paid on throughout your lifetime. A term policy is different because it is purchased for a set amount of time and when that term is over, the policy has to be renewed with higher premiums or turned into a permanent policy. With whole life, there is no renewal or conversion involved.
Whole life insurance policies have the same premium rates throughout the time the policy is in force. As long as your payments are timely, the price is locked in. The money you pay in to a whole life policy builds cash value, meaning you can make money on your policy. The result is a modest dividend on your payments. Dividends on whole life policies can be taken immediately or applied to the price of your premiums to lessen the monthly cost. This money is exempt from taxes and so does not have to be counted as income.
While your policy is in force, you can borrow against the face value or withdraw funds from it. If you have done this and you die before you replace the money, your beneficiaries will not receive the full amount for which you originally paid.
Unlike universal life insurance, when you purchase a whole life insurance policy you do not have a say in which investments are made, you have no control over premiums (the amount you pay in) or the face value of your policy. Your premium price will remain the same throughout your lifetime as will the face value of your account.
If you would rather not be involved with choosing investments for any reason and are fine with the original value of your whole life insurance policy, then this is the type of policy you will want to choose. You will receive modest dividends and your loved ones will be taken care upon your death with a whole life insurance policy.
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