The Whole Life Single Term Insurance Policy
There are two major types of life insurance policies: whole life insurance and term life insurance. The primary difference between the two is that whole life insurance can be utilized as a savings and investment vehicle, not including benefits payable upon death, while term life is only payable upon the death of the insured.
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Terms
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Whole life policies come with a specified term. Most whole life policies begin at a term of 10 years. The longer the term, the higher the benefit payable upon death. Terms can be as long as 50 years.
Rates
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Rates for whole life insurance, in comparison to term life policies, are higher. However, the opportunity to use a whole life insurance policy as an investment vehicle--because of the capability to invest some of the monthly premiums into stocks--can outweigh the inconvenience of an additional expense.
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Benefits
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Benefits on a whole life policy are payable upon death of the insured as well as any invested dividends. For example, if a person with a $400,000 policy had earned $32,000 in investment dividends during the life of the policy, his beneficiaries would be paid $432,000 upon his demise.
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References
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