It is unfortunate that when you get a whole life insurance quote online much of the important details are omitted. The average person knows little or nothing about this policy. If people had more information they could make a more informed decision on what they are about to purchase. I am one of those who tout whole life insurance with no apology, as this policy has it's place in the insurance portfolio of many people. This policy fits some needs that term life insurance simply cannot fulfill.
Permanent Life Insurance
Whole life insurance can be described as permanent life insurance. This suggests that you can keep this policy for as long as you choose, even if it is to age 100. A term life policy simply cannot guarantee that.
Cash Values
Whole life insurance have what is called "guaranteed cash values". Some people like this idea because they may choose to use these values as a sort of saving to assist with the college costs or even for a supplemental retirement fund.
Whole Life Insurance Dividends
All whole life policies are not the same. Some life insurance companies have a great history of paying dividends to their policy owners on a very regular basis. This does not say that they always will be in a position to pay a dividend. Dividends are not guaranteed. There are some life insurance companies that do not perform very well.
If a life insurance company is generally successful with their investments and do a good job at keeping expenses down they usually can pay a dividend.
There are several options that you can choose from but most people have a tendency to apply their dividends to the purchase of "paid up additions". These are little single premium whole life insurance policies.
The other available dividend options areas follows. You can leave your dividends to accumulate interest or you can use them to reduce premiums. You can also take them in cash each year.
Why Cash Values And Dividends Are Important
If at some time in the future you should need to put your hands on some emergency cash and that money is available through your cash values plus dividends you may take a percentage of this in the form of a policy loan. Even though you decide how you repay this loan you need to keep in mind that there is interest charged on this loan. In addition the death benefit of your policy is reduced by the amount owed and any unpaid accumulated interest. Another thing to note is that if you have an outstanding loan on your whole life insurance policy the amount of dividend paid will also be affected.
Nonforfeiture Values
Another important consideration when buying whole life insurance policies are nonforfeiture values. These options allow you to protect yourself from loss in the event you are unable to continue premium payments.
Automatic Premium Loans
With most whole life insurance policies if a premium payment is missed the automatic premium loan is timely activated to prevent the policy from going into a state of lapse. In other words, you do not lose your insurance as long as there is sufficient cash value to keep it in force. Interest is charged on this amount just like any other premium loan.