Digital News Report – In the past whole-life insurance policies were considered a less than optimum investment. With the economic crash and dismal returns (or losses) from the stock market, these investments are looking much better.
Unlike term life insurance policies, whole life insurance policies are invested conservatively in bonds. After the term of your term life insurance policy you have nothing. According to Leslie Scism with the Wall Street Journal, the economic meltdown has made whole-life policies more attractive.
Whole Life Insurance, sometimes referred to as Whole of Life Assurance, is a life insurance policy that remains in force for the insured’s whole life. In most cases it requires premiums to be paid every year into the policy.
There is a “cash value” to the whole life policies. The cash value plus interest builds up towards the death benefit. Upon maturity, usually at age 95 or 100, the cash value would equal the death benefit.
Before you rush out and buy a policy there are a few things to consider. Scism warns that there is a “steep up-front” commission that usually eats up the first year’s premiums.
The Scism report says this type of policy is good for people with “plenty of money to invest beyond their 401(k)s, but only if held until death”. Most people should stick with term life insurance.
By: Tina Brown