WHAT IS THE WHOLE LIFE INSURANCE

Whole life insurance, as its name implies, is coverage for the whole life of the insured as opposed to a specific period of time (term). Payments (premiums) do not necessarily have to continue over the life of the policy (which, by the way, corresponds to the life of the insured) but if they do, the policy is referred to as a "straight" or " ordinary life" policy. If premiums are to be paid only until the insured attains a specified age or for a certain number of years, the policy is called a "limited payement" policy. It differs from term insurance in another important way. A portion of the larger premiums is set aside with each payment as a savings account. The build-up of this "extra" premium keeps compounding interest over time and results in a cash value far beyond what is paid in. Of course the cash value of the policy varies at any given point in time.

Whole life insurance is probably the most popular form of life insurance for those who can afford the premiums because it combines savings with protection.
In the last several years all sorts of policies have arisen with ways of using the savings portion of the premium for investments (variable life policies) or tailoring the size of the premiums to the desires of the consumer; i.e. allowing smaller payments during anticipated leaner periods of the client's life, etc. Premiums can be paid monthly, quarterly or any convenient way you and your agent agree upon. The most economical way, if you can do so without significant hardship, is to make annual payments. That way your premium will be compounding interest from the beginning of the year and there will be no"service charge." It may also be useful to note that it is less expensive to buy one large policy than several small policies.
Endowment. An endowment policy is another type of savings accounts. Although it insures against death for a specified period of time rather than for the whole life of the insured, the premiums are higher than term insurance premiums, the extra cost going into the build-up of a cash value. Endowmentpolicies are actually a hybrid of term and whole life insurance.
Group policies have been mentioned earlier when discussing health and disability insurance. This kind of life insurance has the same characteristics earlier noted in group plans. Premiums are usually lower than individually purchased policies thanks to group rates.

When provided by an employer, group life insurance is considered a fringe benefit. Another feature which distinguishes group policies from individual life policies is the fact that evidence of insurability is not required; i.e. there is no necessity for a qualifying medical examination as there is when you applyfor an individual life insurance policy.

Social security, while not commonly thought of as life insurance, is really just that. It provides benefits to the family of a deceased worker through a formula determined by taking a percentage of what the insured would have received as retirement benefits had he reached age 65. You should familiarize yourself with eligibility requirements and benefits.

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