What is Whole Life Insurance & Who Needs It?

by : Joe Stewart

Whole Life insurance is a type of policy that is designed to provide you with protection for as long as you live or your "whole" life. You can buy any amount of Whole Life insurance that you want to and designate anyone that you choose as your beneficiary. The beneficiary is the person that the sum of money is paid to in the event of your death. You are the "insured".

Whole Life insurance isn't nearly as popular as it once was. This is because there has been a new type of insurance available for quite awhile now called Term Life, that is less expensive than Whole Life is, but provides just as much protection.

The main difference here is that a Whole Life policy takes a portion of what you pay into it and places it into an interest bearing savings account. You can borrow against this account later as it grows into a tidy sum. The issue that many people have as that they would rather just buy "pure" insurance coverage, such as Term Life, and invest their money elsewhere. This makes complete sense because there are likely to be many places where you could get a better return on your money than having it invested in an insurance account.

Also, a person really doesn't need an insurance policy for their whole life, if you think about it. Once your kids are through college, your home is paid for and you have no other major expenses, why do you need to continue to buy life insurance? Burial insurance, yes, but other than making sure you are going into the next life without leaving a burden on someone it doesn't make a lot of sense, unless, of course, you don't have a solid retirement plan in place that will provide for your spouse or significant other. In this case you would want to have life insurance protection in place.