Whole life insurance, a type of permanent insurance, operates by offering continuous coverage with a guaranteed death benefit as long as regular premiums are maintained. When considering a whole-life policy, it's essential to assess your financial goals, insurance needs, and budget to determine whether it's the right fit for your circumstances.
- ? Premiums remain consistent, ensuring that you pay the same rate throughout the policy's duration.
- ? During the initial years of coverage, a portion of your premium payments is allocated to cover insurance costs and associated fees.
- ? Another portion of your premiums, known as excess premiums, is directed towards building the policy's cash value.
- ? Insurance companies invest these excess premiums, resulting in interest earnings that contribute to your policy's cash surrender value.
- ? The higher the cash value component, the more interest is generated, enhancing the overall value of the policy.
