Traditional Whole Life Policy

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DEFINITION of '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.

BREAKING DOWN 'Traditional Whole Life Policy'

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.

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RELATED FAQS
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  3. Can you do a life insurance to life insurance 1035 exchange after the new life insurance ...

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  5. What is the difference between the death benefit and cash value of an insurance policy?

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