Whole Life Insurance

Form of life insurance policy that protects the insured’s beneficiary(s) in case the insured passes away. Unless the policy lapses or is canceled, it will remain in effect for the insured’s lifetime. The policyholder pays a set yearly premium that does not increase as the person ages. The cash value portion of the policy accumulates tax-deferred, and may be borrowed against in a device called a policy loan. If the loan is not repaid, the death benefit is decreased by the loan amount. Whole life insurance is also known as “permanent” life or “straight” life insurance.

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