Whole Life Insurance

Whole life insurance, sometimes called "straight life" or "ordinary life," is a life insurance policy which is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date. As a life insurance policy it represents a contract between the insured and insurer that as long as the contract terms are met, the insurer will pay the death benefit of the policy to the policy's beneficiaries when the insured dies. Because whole life policies are guaranteed to remain in force as long as the required premiums are paid, the premiums are typically much higher than those of term life insurance where the premium is fixed only for a limited term of 10, 20 or 30 years. Whole life premiums are fixed, based on the age of issue, and usually do not increase with age. The insured party normally pays premiums until death, except for limited pay policies which may be paid up in 10 years, 20 years, or at age 65. Whole life insurance belongs to the permanent category of life insurance, which also includes Universal Life. Variable Life and Endowment Policies. Whole life polices can be used to accumulate cash value on a tax deferred basis and money can be withdrawn tax free in the form of a loan and the loan will be forgive at death with the payment of death benefit proceeds minus the loan amount and accumulated interest.