Level Premium

Whole life insurance has a fixed level premium which never increases for as long as you own the policy. When you pay a whole life premium a portion goes to pay for the death benefit and a portion is applied to cash values. In the initial years a portion of the premium is also applied to administrative costs.

Death Benefit

Like any other life insurance policy the whole life insurance policy has a guaranteed death benefit which can be paid either in one lump sum or in the form of a monthly income. This death benefit is usually paid free of federal income taxes. There are several income options including a life income, an income for a fixed predetermined period and an income for a fixed amount. The insurance can also keep the principal and just pay the interest. The principal is paid upon demand.

Cash Values

The whole life insurance policy contains a guaranteed cash value which accumulates tax deferred. If you are ever in need of cash you may borrow from your cash value. You don`t need to tell the insurance company why you want the money and you pay back the money at your convenience.

Dividends

Cash values earn dividends which depend on the performance of the company. these dividends are not guaranteed. They can be taken in cash, can be left to accumulate interest, can be use to reduce premiums or they can be used to purchase paid up additions. Paid up additions on a whole life insurance policy is a fully paid up whole life policy. These paid up additions have cash values and also earn dividends.

There are many riders you can add to your whole life insurance policy. The two main riders are the waiver of premium benefit and the accidental death benefit rider also known as the double indemnity rider.

Waiver Of Premium.

If the insured should become disabled, any time after six months of disability the life insurance company will step in and pay the premiums even if the disability lasts for the lifetime of the insured.

Accidental Death Benefit

If the insured person should die in an accident, for example an automobile accident, the life insurance company will pay twice the death benefit. If you have a policy for $100,000, and you have the accidental death benefit rider, the insurance company will pay $200,000 to your beneficiary.

The above benefits may be worth the extra premium you would pay for a whole life insurance policy.