Factors to Consider When Choosing Whole Life Insurance

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A whole life insurance policy is recommended when a person needs a permanent or lifelong life insurance policy. The policy features an inbuilt savings element as you continue paying premiums and the cash value build-up within the policy. The whole life policy can be utilized as a part of estate planning.

The premiums of this type of policy can be much higher, compared with the term life policy. However, the premiums could be lower in the long-term compared to the premiums you would have to pay for your term policy, if you were to keep renewing it to your later years.

Therefore, the life policy offers a perfect choice for anyone looking for a policy for their entire lifetime. The following are some of the factors to consider when choosing your whole life insurance policy, including:

· Scheduled premium payments

It is important to know whether the scheduled premium payments are likely to change over time. Generally, the scheduled premiums in the traditional whole life product remain level every year the policyholder is alive. Premium payments consist of savings and life insurance coverage.

However, these 2 elements can vary during the lifetime of the policyholder, with the total premiums payable remaining the same. Some companies offer a modification to the premiums payable, with the required premiums being lower in the former years and higher in the latter years.

Therefore, it is important to know the scheduled payments in order to choose one that caters for your convenience.

· Cash value vs. face amount

The cash value refers to the in-build value of the policy, while the face amount refers to coverage you hope to provide your loved ones in the event of your untimely death. The minimum amount of cash value is often set by the law to reflect the accumulated premiums after all the company expenses and insurance claims have been paid.

Generally, you want a company that will be in a place to offer attractive cash values. Over time, these cash values grow, making it possible for the policyholder to borrow a loan against those cash benefits.

The face amount tends to be higher that the cash values, particularly during the former years of the policy. If you choose to surrender the policy, you will get the cash value, without the face amount.

· Payment of premiums

When choosing a whole life policy it is advisable to find out whether you are required to pay your premiums throughout your life in order to keep it in force. The traditional products provide for a repayments period and premium amounts that are the same throughout the policyholder's life.

However, newer products allow policyholders to pay their premiums for a shorter time period, say until the age of 60 or 25 years or in one installment. Premiums for this kind of policies are normally higher because the payments are made over a shorter period.

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