What are the major advantages of a whole life insurance policy?

Selecting the type of life insurance policy that best suits your needs is not an easy task: it is a vital decision you are making so before you start shopping around, make sure you know exactly how much coverage you need and how long you are going to need it for.

Who is Whole Life Insurance for?

Whole life insurance is typically the best option for people who have permanent needs for life insurance protection that continue beyond the age of 65 or 70. According to some financial planners, the more you age, the less life insurance you need.

If you don't have any dependants, have paid off your mortgage and cleared out all your debts, you can easily afford your budget to shrink. However, a number of people are likely to need life coverage even in their later years, as when there is a large estate tax or a divorce settlement, for charity or if the policy owners want to leave some money to their families.

The other group of people who can benefit from owning a whole life policy, are the ones who wish to save money. Whole life policy allows this, because of the cash value element accumulating, which belongs to the policyholder and can be borrowed, withdrawn or invested. However, the real advantage of purchasing whole life insurance just for investment is questionable, as whole life insurance premiums are sometimes prohibitively high.

Why Buy a Whole Life Insurance Policy

• There is a zero-risk 100-guarantee return: the insurance company will either pay your beneficiary when you die, or pay you when you reach a certain age (usually 99).
• Your premiums remain the same for life, regardless of the change in prices, market conditions, your age or your health.
• Unlike term insurance, which is cheap but does not offer any living benefits, whole life insurance has a cash value and a dividend option which you can use for a whole range of purposes: from lowering your next premium to investment.

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