Whole life insurance, sometimes called “participating life,” offers lifelong coverage and pays a tax-free amount to your beneficiaries when you pass away. The policy’s value also grows over time, accumulating cash value as long as you keep up with your premium payments.
Your payments are pooled in a separate account called the “participating account” with other policyholders. The account is professionally managed, and you may receive dividends based on its performance.
How does it work?
Pay your premiums, and your policy’s cash value grows tax-free, within limits.
Your payments go into the participating account, which is professionally managed.
That money is used to pay for expenses, taxes, insurance claims, and other items.
You may receive dividends based on the participating account’s performance.
You can take your dividend as cash, buy more Insurance, or pay for your existing coverage.
Whomever you choose receives a tax-free payment when you die.
How much does it cost?
Participating life insurance can be more expensive than term and universal life insurance because of the policy’s guarantees.
Several variables determine the cost of your policy. Here are a few of the main factors:
- Age: Generally, insurance is less expensive when you’re younger.
- Health: Family history, chronic diseases and lifestyle can increase costs.
- Gender: Women live longer than men on average, so Insurance may cost less.
- Occupation: If you have a dangerous job, your insurance costs can be higher.
- Your policy’s cash value.
Guaranteed growth
When your policy’s cash value grows, the new total is automatically guaranteed and is protected from declines unless you use it for some other purpose. It can be reduced only if you use the cash value.
Flexible access
You can access your policy’s cash value in several ways: Borrow from your policy, use it as collateral for a third-party loan or withdraw cash value. This may affect your coverage, and you may have to pay taxes.
Participate in your account’s earnings
If the participating account performs better than expected, we may distribute dividends from these earnings. You can use dividends in one of several ways:
- Increase your coverage, which may increase the policy’s cash value.
- Decrease or stop your payments.
- Take your dividends as cash.
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