Whole Life covers you for the whole of your life rather than a fixed term and pays out on your death. Whole life combines insurance with an investment component. A whole life policy has two elements: the mortality charge, the part of your premium that pays for the insurance coverage, and a reserve, the investment component that earns interest. As you age, the portion that goes into the reserve decreases while the portion that pays for the mortality charge increases. The investment could be in bonds and money-market instruments or stocks. The policy builds cash value that you can borrow against.
Whole life is expensive, and if you’re on a limited budget, you may not be able to afford all the insurance coverage you need. The policy’s returns will fluctuate with the markets. The extra expense will only be worth it in the end if the policies were a sound investment vehicle. The three most common types of whole life insurance are traditional whole life policies, universal and variable. As you can see, term life insurance is a good source of protection for most people and many different situations. From young families to single parents to business owners, the low cost and simple protection offered by term life insurance is often the best choice View quotes
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