Lou Holtz says, "Ladies and gentlemen, you are not selling life insurance. All you're trying to do is help people solve problems before they arise."


Whole Life Insurance

Whole Life policies are referred to as permanent protection, since as long as the premium is paid coverage will continue for the life of the insured. The premium for whole life policies is based on the issue age (or the insured's age at the time the policy is issued); therefore, it remains the same throughout the life of the policy. The death benefit is guaranteed and also remains level for life. Whole life insurance policies in general are useful for an indivudual who wishes to lock into a level premium amount that will not increase over his or her lifetime. This is particularly so for an individual using insurance as a tool in estae planning.



Whole life policies also build cash vaules (living benefits), which the policyowner can borrow against, or is entitled to, in the event the policy is surrendered. The cash value, called nonforfeiture value, does not usually accumulate until the third policy year and grows tax deferred. The policy owner may also borrow the cash value of a whole life policy. However, the amount of any outstanding loans and interest will be deducted from the policy face amount upon the insured's outstanding loans and interest will be deducted from the policy face amount upon the insured's death. Additionally, the insurer may defer payment of any loan request for up to 6 months.

Whole life insurance provides protection for the entire lifetime of the insured. If the insured lives to the age of 100, the company pays the face amount of the policy to the insured. The cash value, which is created by the accumlation of premium, is scheduled to equal the face amount of the policy at age 100.

There are several types of whole life policies. The first three, Straight Life, Limited Payment, and Single Premium, are the basic forms of whole life. They are based on how the policyowner pays the premium. It is important to note that although the medthods of payment differ, they all still operate as the traditional whole life policy described above. All the other types of whole life policies are specialized types of whole life policies.