Traditional Whole Life Policy
A type of life insurance contract that provides for insurance coverage of the contract holder for his/her entire life. Unlike term life insurance, which covers the contract holder until a specified age limit, a traditional whole life policy never runs out. Upon the inevitable death of the contract holder, the insurance payout is made to the contract's beneficiaries. These policies also include an investment component, which accumulates a cash value that the policyholder can withdraw or borrow against.
Investopedia Commentary
This type of life insurance provides the policyholder with a guaranteed amount to pass on to his/her beneficiaries, regardless of how long he/she lives, provided the contract is maintained. Most policies also offer a withdrawal clause, which allows the contract holder to cancel his/her coverage and receive a cash surrender value.
Related Links
Buying Life Insurance: Term Versus Permanent
The Evolution of LTC-Insurance Plans
Getting Started On Your Estate Plan
See also: Beneficiary, Cash Surrender Value, Death Benefit, Life Expectancy, Life Insurance, Term Life Insurance
Also spelled: whole life coverage, whole life insurance