Whole life insurance is a form of life insurance that applies part of the premium payments to build an investment or savings value for the policy owner. The investment or savings value is called the cash surrender value of the policy. Coverage lasts throughout the lifetime of the insured as long as premium payments are made. Premiums generally are level and payable for life.
Since premiums are level, younger clients have less expensive premiums. Whole life insurance also offers guaranteed cash values. Unlike term life insurance, which does not accumulate any cash values, some of the money your clients pay into their whole life policies accumulates as guaranteed cash values. If they choose to surrender the policy, these guaranteed cash values would become available to them. Most whole life insurance carriers allow clients to borrow against the policy at an agreed upon interest rate.
The amount of your clients' guaranteed cash value depends on the kind of whole life policy they have, its size and how long they have had it. The growth in cash values is tax deferred under current federal income tax law. Borrowed amounts reduce the death benefit and cash surrender value.
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