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If the idea that you can earn cash value or potential dividends appeals, then this should not be your only reason for choosing your life.

While it is more complicated than traditional term life insurance, whole life insurance functions more easily than other types permanent life insurance. The premiums stay the same for as long you live and your cash value account grows at the fixed rate. Unless you borrow large amounts of cash value, the death benefit remains guaranteed. If you borrow against your policy you don't have any obligation to repay the loans. However, your insurer may subtract any outstanding loans you owe from the final death benefit you pay to your beneficiaries.

Your need for financial protection changes with life. If you can relate, whole life insurance is a good option.

Whole life insurance is more common than term life and it costs more. Most policies offer coverage that can last a lifetime and payouts no matter what time you die. Whole life insurance has a cash-value component. A portion of your premiums gets paid into the account. It grows over time. Once you have enough cash, you can borrow against your account or surrender your policy to get cash.

Whole-life insurance rates are higher than term insurance rates. However, life insurance that doesn't expires and has a cash reserve may be worth the expense.

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The death benefit is the amount your loved ones can spend on funeral expenses, mortgage payments and college tuition. However, depending on what your coverage needs are, one type of insurance may be more suitable than the other.

Whole life insurance is the most commonly purchased type of permanent life insurance. It costs more than term insurance. These policies provide protection that will last a lifetime with guaranteed payouts regardless of your death. The cash value component of whole life insurance is also included. Your premiums are paid into the account. The account will grow over time. Once the cash value has been built up, you can either borrow against the account or cash out the policy.

The whole life insurance dividend is another feature. Based on the performance of the company in the previous year, policyholders may receive an annual payment. Although dividends are not guaranteed but you can receive one if you wish. Future premium payments can be reduced.

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As life changes, so too does your need to have financial protection. Consider whole life insurance if any of the following items can be related to you.

You can also provide for your loved ones after you pass away. Whole-life policies build cash value that you can borrow or withdraw from at any time.

The policy payout is the same as a term-life insurance policy. As long as your premiums are paid, the death benefit amount is transferred to your beneficiaries as a lump sum that is not subject to tax. The death benefit will be paid in cash by some whole-life policies that are more expensive.

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The cash value: This account accumulates interest over time. You have the option to withdraw from it or make a loan against. This investment is not as rapid as a regular investment but can grow steadily and be tax-deferred. The normal breakeven point (when cash values exceed cumulative premiums paid), can take between 10 and 20 year. So, the older you get, the less it makes sense to buy a new policy with cash value.

Whole life insurance

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You can provide for your family after your death by purchasing whole-life insurance. A portion of your premium is set aside for cash value growth, much like building equity in your house.

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For people who have specific circumstances such as high-earners who require additional investment vehicles or those with dependents for life, whole life coverage is the best option.

The policy death benefit: This policy payout is exactly the same as term life insurance policies. If you pay your policy premiums, the death benefit amount will be paid to your beneficiaries in one lump sum. You will receive the remaining cash value along with the death benefit if you have a more expensive whole-life policy.

The death benefit, which is the amount of money you choose to leave your loved ones, allows you to decide how much.