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Whole Life Insurance: How it Differs from Other Life Insurance Plans

Whole life insurance is a type of life insurance that is "permanent." Whole life insurance is the original life insurance product. It offers fixed premiums, a fixed face amount, and internal cash value accumulation. The cash value accumulation credits interest and/or dividends, based on the insurance company's general account investment performance.

The word "whole" refers to the fact that the insurance can be kept in force for a person's whole life. It pays a benefit upon the person's death, whenever that might be. Whole life insurance policies build up non-forfeiture values that are paid for in three different ways.

For example, under a straight life policy, you will pay premiums as long as you live. With a single premium policy, you will pay for the whole life insurance policy all in one premium at once. There are also limited payment plans, where you would pay premiums for a certain period of time or until you reach a certain age.

Universal life insurance is an offshoot of whole life. It builds cash value and is also known as flexible premium adjustable life. The face amount and premium payments are usually flexible, allowing you to adjust your coverage and premium rate based on the stage of life you are in. Your policy will earn interest, which is credited to the cash value account, based on the general account investment earnings of the life insurance company. Generally, the interest rate is declared each year.

Variable life is a third type of permanent insurance. It, too, builds internal cash value, invested in a separate account, managed by well-known mutual fund families. Many of the investment options available with this type of policy are clones of some of the most famous mutual funds.

On the other hand, term life insurance is different from whole life insurance. With affordable term life insurance, you are protected only for a specific period of time. Common policy periods include one year, five years, 10 years, or until the insured person reaches 65 years of age. With term life insurance, you do not build up any of the non-forfeiture values that are associated with whole life insurance policies. Therefore, affordable term life insurance is pure coverage with death benefits only.

Spectrum Direct offers affordable term life insurance policies as well as the different types of whole life policies. If you would like a free quote on any of these types of life insurance policies, please call us at (800) 438-7343. We guarantee you will be happy with our affordable premium rates and will have the satisfaction of knowing that your family will be protected in the event of your death.

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