Whole Life Insurance

Whole Life Insurance is considered by many to be the most desirable form of permanent insurance and as such is the most widely used. It is the lowest cost form of permanent insurance because a given amount of premium dollars will purchase higher face values than for any other type of permanent insurance. It is basically a combination of protection and a savings or investment element. The investment element (i.e., the cash value) is lower, however, at any given time than that of any other permanent form of insurance with the same face value. Thus, this contract is ideal for individuals who are primarily interested in protection but also want a savings or investment feature in their contract. It is a permanent contract, yet its various dividend, nonforfeiture, and settlement options give it a great deal of flexibility. Its main disadvantage is that premiums are due periodically until death.

Limited-pay contracts are particularly useful for professional persons such as entertainers or athletes with high incomes for a few years. The income derived from their talents can be expected only for a limited number of years, and the premium payments can parallel the expected income period. Life paid-up-at-65 policies have the same advantage, permitting any individual to spread his premium payments over his working years.

Either limited-pay contracts or single premium contracts are useful as gifts. For example, grandparents or parents may wish to give their grandchildren or children paid-up contracts at a given age, such as 21. Such contracts either can be purchased outright (a single premium contract) or over a number of years (a limited-pay contract).

The decision as to which type of whole-life policy to buy depends primarily on the needs of the particular buyer. If the primary need is for permanent protection, the straight whole-life policy provides the greatest amount of protection for the least amount of premium dollars. If higher cash values are desired for retirement or other needs, limited-pay contracts or even single premium contracts should then be considered.