What is whole life insurance?

by Lisa Baker

In this we analyze what is whole life insurance, how is it different from basic life insurance? What does it cover? Find out with I Want Insurance.

If you are looking to take out life insurance, we are convinced that you are wondering  what a whole life insurance consists of . We are going to try to help you by making some concepts clear.

What is whole life insurance?

In a life insurance policy, the insurance company is obliged to pay its beneficiaries the benefits signed and guaranteed in the policy. Normally life insurance has a maximum age of permanence. In the case of whole life insurance, this limitation is eliminated by increasing the age of permanence and coverage in an unlimited way.
The purpose of a whole life insurance is to be able to leave a capital to relatives or beneficiaries of the insurance trying to compensate a possible loss of the purchasing power as a consequence of the death of the policyholder.Another reason why many people decide to subscribe to this whole life insurance is to be able to face the expenses derived from inheritance such as inheritance tax.
If you want more information about collecting life insurance due to death, we advise you to read our previous article.

Differences between whole life insurance and risk life insurance

  • The whole life insurance is for life , there is no maximum age of permanence. In risk life insurance, there is a maximum age.
  • The whole life insurance has a premium annuity ; the premium will always be the same.
  • The whole life insurance can be redeemed at canceling can recover part of the amount paid.
  • The capital increases with the age of the policyholder, whereas in risk life insurance it does not.

What characteristics does it have?

  • The rescue: These insurances can be canceled at any time and a part of the amount paid can be redeemed.
  • Capital and premiums: they can be established as constant or change over time.
  • Benefit: As in any life insurance, we can choose if we want a single payment or a temporary or lifetime income to be made.

In addition, they have a particularity with respect to the premiums: you can decide to pay a monthly payment for the whole life or pay during a certain period (for approximately 25 years) but that the policy remains in force throughout the life of the policyholder. This particularity of a whole life insurance is due to the fact that you may prefer to pay a higher premium during the years in which you work and still keep the insurance to leave some inheritance to your relatives, for example.

Advantages of whole life insurance

  • Unchanging premium.
  • Capital improvement, is increasing.
  • Option of early cancellation recovering part of the amount paid.
  • Tax only for the difference between the redemption value and the premiums paid.
  • Is for all the life.

Life insurance is specific products and having the advice of a professional is necessary. If you already know what whole life insurance is and you are looking for a life insurance that adapts to your needs and provides security for your family, do not hesitate to use our life insurance comparator.

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