Whole Life Insurance:
A whole life insurance policy is a type of insurance which remains active for the insured party's entire life, so long as that person continues to pay their premiums. Whole life insurance came about when many insurance customers became upset about their beneficiaries never getting any benefit from their term life insurance. All life insurance policies used to be term life insurance, meaning policy holders would pay premiums for a number of years, and the policy would eventually expire. Insurance customers demanded a form of insurance which would never expire, guaranteeing some benefit upon their death.
Another aspect of whole life insurance which separates it from term life insurance is that the policy has a "cash value." The Cash value accumulates value until the contract reaches maturity, at which point it equals the value of the death benefit. If the insured party dies after this point, the cash value is surrendered to the insurance company, and the death benefit is payed out to the beneficiaries. Prior to this, however, the insured person is allowed to borrow up to the cash value of their policy and forfeit the death benefit. This is a relatively easy way for an insured person to gain access to their wealth.
