Ron s. gilbert

Lifecycle Financial Strategies

Whole Life

Whole Life Insurance is different from term insurance, in that generally premiums are level for life or a period of years and never increase. In some cases the policy is fully owned at a certain point and no further investment is required to maintain the coverage.

The investment in a whole life insurance policy in early years will exceed the pure cost of insurance charged by the insurance carrier. Later on in the future the premium will actually be considerably lower because you have effectively over funded into a growth account in the early years. You pay a little more now and a lot less later.

If you cancel – surrender – all or part of your policy after a period of years, the carrier will typically refund you a portion of your investment premiums. This is known as cash value or cash surrender value. The majority of the cash value in early years is made up of overpayment of insurance premium.

In the past, most of the insurance carriers were mutual – and policy holders participated in the profits of the company. The annual dividend could be paid out to the policy holder in various ways including more insurance or a reduction in premium.

Today whole life insurance is still available and in the right situation a very good investment, however every situation demands careful consideration and there may be other products available to achieve individual goals in a more cost effective way.