Whole Life Insurance

“Whole life insurance” is a type of life insurance in which the insured is covered for their entire life. This differs from term life insurance, in which a specified period of time is decided on when the policy is issued.

In most cases, an insurance premium is paid monthly or yearly throughout the insured’s lifetime, or at least until a specific age, though it’s possible to obtain a whole life insurance policy with different payment terms.

One common trait of whole life insurance policies is that they build up a cash value over time. This money can be “borrowed” and repaid to the account over time at usually favorable terms.

There are several types of whole life insurance policies available in the market today:

Non Participating – This is your basic whole life policy. There is no “profit sharing” piece associated with dividends. The insurer simply charges what they believe will earn them a profit and lives with the outcome.

Universal life – this is the newest form of whole life insurance. The premium payments may vary based on how your fund is performing.
Single pay policies – The name says it all. This policy is obtained by paying the full premium upfront at the time of purchase.

Limited pay – This functions similar to a term life policy on the premium payment side…not the coverage period side, which is for your entire life. You will make premium payments for a specified period of years, or up to a certain age; 65 for example.

Economy based policy – Another policy with attributes of term life insurance, the interest money accrued over the life of the policy is parlayed into the purchase of more term life insurance.

Participating policy – This policy allows the insured to “participate” in the policy over time by receiving benefits based on the profits acquired by policies written by the insurance company, referred to as dividends.

The whole life insurance market has many more options than those outlined above. It is important you purchase life insurance from an agent you can trust and a reputable life insurance company.

Get online insurance quotes and consult a local independent life insurance agent to be certain the premium you’re offered is in the right price range for your unique situation.

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This post was written by The Truth Team on August 10, 2010 Comments (0)