[DeniseM]

If you are still set on whole lofe insurance, make sure you are aware of all the ins and outs involved with the policy and the cash value component. Whole or Permanent insurance operates differently from term life insurance. The premiums are always larger - often five to 10 times the size. The reason that premiums on a permanent policy are more than the actual cost of the policy is that a portion of that premium goes into a savings component known as the policy's "cash value." At the beginning, the cash value is very low because much of the early premiums go towards sales charges and agent's commissions. But as time passes, the cash value accumulates and the insurer can pay the policyholder depending on the dividends or interest agreed upon.

At the point of redemption, depending on the type of policy you have taken, the cash value is either surrendered to the insurance company or included in your death benefits. But the savings portion of your permanent life insurance policy is more than just a way to increase your death benefits. The main advantage is that you have access to this money at any time during your life allowing you to cover any expenses that you otherwise might not have been able to afford.

You can use the cash value component of your policy by requesting a low interest rate loan from your insurance company and use the cash-value account as a guarantee or by surrendering the cash value portion (completely or partially).

Another perk of permanent life insurance policies is that they enjoy favorable tax treatment. You pay no taxes on any earnings in the policy as long as the policy remains active. Money can also be withdrawn from the policy without being subject to taxes as such loans are not considered taxable income.

Denise AccuQuote
Disclaimer: I work for AccuQuote and this is my personal opinion.