A whole life insurance policy provides insurance for the entire duration of an insured person’s life. They pay a benefit on the death of the policy holder as well as including a savings component where part of the premiums paid for the policy accrue in a cash value as part of the policy. Whole life insurance policies are a type of permanent life insurance that is sometimes also called universal insurance, indexed universal life insurance or variable universal life insurance.
This type of life insurance policy lasts for the duration of a person’s life as opposed to term life insurance which only applies for the number of years (the term) specified in the policy. Whole life insurance is paid out to the beneficiaries listed in the policy only if premium payments have been maintained throughout the person’s life. The cash or savings component of this type of policy can be invested to provide additional returns and the policyholder can access this money while still alive by withdrawing some of the money or borrowing against it.