A few of the basics on...

Whole Life Insurance

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Whole life insurance is designed to provide coverage your "whole life" (age 100), provided the premiums are paid. Not only does a policy provide a death benefit, but cash values on a tax deferred basis, are accumulated as well. This type of insurance is also known as Permanent, Cash Value, Standard and Ordinary.

Level face amount and fixed premiums

With a standard policy the premiums remain fixed while the face amount remains the same. By contrast, a "term life" policy generally starts out costing less but over time, premiums rise and there is no accumulation of cash.

When to purchase

The best time to purchase whole life insurance is when you are younger since premiums are based on the age of the applicant. It is important to note that if you have a good health history, you may qualify for preferred rates through many carriers. Conversely, if your health is poor, it may be difficult to qualify even for a standard policy. However, there are several burial insurance policies that offer smaller amounts of coverage (usually no higher than $20,000) while asking only a few general health questions - and in some cases, no health questions or physical are required.

Additional features

Other features of a whole life insurance policy, are the ability to borrow against it or cash it in entirely while you are still living. When death occurs after money has been borrowed, the face amount is reduced by the amount of the loan. Once it has been "cashed in" the policy is terminated and there are no benefits available upon death.

Also available as a rider with many policies, the guaranteed insurability option allows you to purchase additional insurance at older ages regardless of your health status.

This type of coverage is suitable for you if...

• Your need for insurance is long term.
• You want to take advantage of the tax deferred benefits.
• You'd like to accrue cash savings for future needs, such as college tuition, retirement, etc.

How best to determine if a company is financially sound

Always check the ratings. Companies that provide this service include:

• Weiss Research (www.weissratings.com)
• Standard and Poors (www.standardandpoors.com)
• A.M. Best (www.ambest.com).

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For more information on this topic and to review our side-by-side
comparison of Whole Life and Term Insurance, click here.

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