| The first step in buying life insurance is to | | | | sell a policy to a new customer. It is |
| understand the different types. In this | | | | important to understand a bit about the |
| article, we take a look at whole life | | | | workings of the company when evaluating this. |
| insurance. | | | | The Insurance Company is taking some serious |
| | | | risks. The payout amount compared with the |
| There is a common saying about life insurance | | | | annual premium mandates that the majority of |
| that is one of those things that is half | | | | the policy holders remain alive long enough |
| joking and half serious. It is said that life | | | | to cover the payouts to the beneficiaries of |
| insurance represents a bet between you and | | | | the unlucky ones who die. The investments |
| the Insurance Company. The Insurance Company | | | | that are made by the insurance companies are |
| is betting that you live a long time, and you | | | | generally safe ones that will insure a steady |
| are betting that you die. If you do die, you | | | | influx of capital without undue risk. |
| win the bet. This simplification contains | | | | |
| some elements of truth. A Whole Life | | | | There are also administrative costs that |
| Insurance policy is designed to collect | | | | reduce the amount of investment profit that |
| premiums or payments from the holder of the | | | | goes into increasing the cash value of the |
| policy. These premiums are combined with the | | | | policy. There are better ways to invest for |
| funds collected from all of the other policy | | | | your retirement than excessive Whole Life |
| holders and invested. When a policy holder | | | | insurance policies. The best way to view the |
| dies, the agreed upon benefit is paid to the | | | | policy is to go back to the bet concept. The |
| designated beneficiary. | | | | idea of a personal Whole Life Policy is to |
| | | | provide protection to your family in the case |
| In some cases, a Whole Life policy will pay | | | | of your death. |
| the designated benefit upon the diagnosis of | | | | |
| a critical illness, but basically, they are | | | | Insurance is one of the key elements of a |
| designed to provide the benefit upon the | | | | sound personal financial planning game plan. |
| death of the policy holder. There are several | | | | It is designed to provide the protection |
| different forms that a Whole Life policy may | | | | against the uncertainties of life. The idea |
| take and each has slightly different rules. | | | | is to find the middle ground. Excessive life |
| In some forms, the policy holder shares in a | | | | insurance can drain valuable cash resources |
| portion of the investment earnings of the | | | | that can be better used elsewhere while |
| company. Under this system, the policy can | | | | insufficient life insurance can leave your |
| actually accumulate a cash value above the | | | | dependants at risk should the unexpected |
| basic death payout. This cash value can be | | | | occur. A Whole Life Insurance policy can be |
| borrowed against in an emergency or | | | | an integral part of a well balanced financial |
| considered as part of retirement planning. | | | | plan, but it should be carefully thought out |
| | | | and all the various types of plans evaluated |
| The Whole Life Insurance companies will often | | | | to find the one that best fits your |
| stress this cash value when attempting to | | | | individual needs. |