Whole life insurance provides a death benefit paid to the beneficiaries upon the death of the insured within the terms and conditions of the policy. The premium payments are generally level and are usually guaranteed to remain so for duration of the contract. Most whole life policies build cash value by the accumulation of interest and dividends in the investment component as well as a portion of the premium being applied to purchase paid up insurance units. The gains in the policy accumulate on a tax deferred basis. The withdrawals up to the cost basis are ordinarily withdrawn tax free. Loans may be drawn on the funds while the insured is alive.
Whole life policies are considered to be a form of permanent protection with certain guarantees that make it appealing for estate planning and wealth accumulation. Providing the premiums are paid on time and the terms and conditions of the policy are met, whole life insurance policy generally provide a guaranteed death benefit not to expire at a guaranteed premium cost with guaranteed dividends payable by the insurance.