Define Whole Life Insurance
Whole life insurance provides coverage for the life of the policy holder. One feature of the policy is that it provides fixed premiums throughout the life of the policy. Whole life insurance is a good choice for those with long-term goals and who are looking for fixed premium payments and guaranteed cash values. Flexible features such as level premiums, dividends, and cash values are what make whole life insurance the premier life insurance choice.
Level Premiums
A strong feature of the whole life insurance policy is that premiums remain the same throughout the course of the policy. To ensure the lowest payment, it’s best to acquire the policy at a young age as younger adults who are non smokers, are able to purchase policies with lower premium payments.
Dividends
Whole life insurance also allows dividends to policy holders. Policy holders earn dividends when the actual life insurance costs turn out to be less than the set premium payment.
Cash values
With the whole life insurance policy, cash values accumulate and are guaranteed. Upon cancellation or surrender of the policy, cash values are available to you. There are different factors that can determine the amount of cash value received such as the size of the policy and how long you have the policy.
It is good to note that high premium payments accompany whole life insurance policies so you should consider buying whole life insurance as a long-term savings plan. Many people use whole life insurance as a built in savings plan with the cash value policy. Additionally, wealthy people use whole life insurance as apart of their estate planning.
When looking for whole life insurance, understand that there are many types of polices available. You’ll want to be familiar with them all before you make a decision on which policy best fits you and your family’s needs.
Non-Participating Whole Life Insurance
A non-participating whole life insurance policy has a stable premium payment and policy term amount. All values related to this policy including death benefits, cash surrender values, and premiums are at stable amounts and determined during the initiation of the policy The premium payment for this type of policy is usually low.
Indeterminate Premium Whole Life Insurance
Intermediate premium whole life policies allow for premiums payments to change year after year. How this works, is that the insurance company will evaluate the policy holder’s current investment earnings, approximate mortality date, and financial expenses then take those figures to estimate the change in payments over the years.
Participating Whole Life Insurance (Also known as Commonwealth)
A participating whole life insurance policy allows the policy holder to earn dividends received by company results and excess investment earnings. Dividends can be paid in cash, applied to your premium payments, used to increase the face amount of coverage, or to accumulate interest. Both, the policy holder and the insurance company share the dividend amounts.
Level Premium Whole Life Insurance
A level premium whole life insurance policy has the benefit of allowing policy holders the ability to pay a level premium payment for the life of the policy holder. Any money left over from the premium payment will be held and invested to be used as cash value, which is the value that builds up in the policy over time.
Limited Payment Whole Life Insurance
This type of plan allows the insured to pay only a limited number of premium payments over, making their term length, shorter. Options include 20 payment plans. A limited plan can also be based on age. For instance, a policy holder can pay until they reach the age 60 or 70 but this policy continues for the life of the policy holder.
Single Premium Whole Life Insurance
With a single premium whole life, the policy holder has the option to pay one large lump payment upon the initial due date. Therefore, no more premium payments are made. The way the single premium is packaged, it can be viewed as a investment type plan.
Whole life insurance is often considered to be the premier life insurance policy because of its various flexible features. Whole life insurance may have a higher premium amount, but the benefits are well worth the increase in price.
