Whole Life Insurance: Description of Whole Life Insurance

If you have loved ones you want to financially secure in the event of your death, whole life insurance can help. Whole life insurance will last for the rest of your life, whether you buy it when you are 25 or 65 years old.

There are several different types of whole life insurance policies for you to choose from in order to best suit you and your family’s needs.

A non-participating whole life insurance policy has a fixed premium and a fixed indemnity. Neither you nor your insurance company can change your premium rate or death benefit at any time. This policy is great for those who just want to get coverage then forget about it. The premium rate is comparatively low and it has no savings features.

An indeterminate premium is a non-participating policy with a flexible premium. Your insurer will adjust your premium up or down, according to your insurers administration expenses.

A participating whole life insurance policy treats you as a shareholder in the company. Each year, your insurance company reviews its investments, payouts and expenses, and any excess earnings go to you. This money can go toward your premium payments, adding more coverage, a cash payment to you or into an interest-earning savings account. In the event that the company does not have excess earnings, you will not receive a share for that year.

A limited payment whole life insurance policy allows you to have a shorter time period to pay for your coverage. For example, if you are 25 years old, you can reasonably expect your lifespan to be about 60 years; with a limited payment policy you can reduce the number of years you pay premiums to 20 or even 10 years. You can do this because you will increase your premium rate to cover the total cost of the policy. The time-period limit can also be to a certain age, for example, until you retire at 65 years old.

Whole Life Insurance: Description of Whole Life Insurance

A single premium whole life insurance policy is purchased with a one-time payment up front. This means that no further payments need to be made on the policy. This type of policy is treated more like an investment and will earn interest as well as have a cash value from which you can withdrawal.

Whole life insurance will give you a lifetime of comfort in knowing you have financially provided for those you treasure.

Whole Life Insurance: Contrast Between Whole Life And Term Insurance

Do you know what type of life insurance will be most effective in financially securing your family and loved ones? The two main categories are whole life insurance and term life insurance. Once you decide between these two, you can narrow down the details.

Term life insurance was the original form of life insurance. Term life insurance lasts for a predetermined amount of time. You can purchase a term life insurance policy for anywhere between one and 30 years. However, people started outliving their term policy and ended up with nothing to give their families after years of payments. This was the advent of whole life insurance. For a higher premium, the insurance company agrees to cover a person for his whole life.

Term life insurance stayed basically the same. However, whole life insurance experienced changes and added benefits to suit customer demands. Premiums started being used for cash value options, savings with interest rates, and investment opportunities.

Since term life insurance remained strictly as a death benefit with a fixed low premium and a fixed death benefit, it has remained the choice for people who want just that: a death benefit. It is very affordable to those with a limited income who want to provide for their family in the event of their death.

The changes in whole life insurance cater to the wealthier clientele, turning the policy into a savings and investment vehicle. These additional options require the insured to pay higher premiums because they are paying for the eventual indemnity as well as their investment opportunities. Whole life insurance is a death benefit with a chance for the policy-holder, and the insurance company, to make some money.

One of the biggest contrasts between whole life and term life insurance is in the indemnity paid to your beneficiary. There is a certain type of whole life insurance policy that will pay out your cash value on top of your death benefit. This allows your surviving loved ones the opportunity to get back a portion of the premiums you put into the policy. Term life insurance does not offer this feature; it is a strict premium in/indemnity out arrangement. Again, the comparative price difference between these two policies is significant.

In either choice, you will provide for your family. Your budget forecast and interest in investment opportunities will guide you to the choice that is right for you and your loved ones.

Whole Life Insurance: Rates For Whole Life Insurance

Whole Life Insurance: Contrast Between Whole Life And Term Insurance

Whole life insurance can make a huge difference to your family in the event of your death. Using your premiums to invest in money-making vehicles can provide an even bigger cash payout for your loved ones. Your cash value is even available to you before you die. You can borrow against your premiums to pay for the big expenses that come along, such as a child’s education or your retirement.

The main characteristic of your premium is that it will be higher at the beginning of the policy than it will be as you approach the end of your life. This is in order to keep the premium at a level rate and account for your insurance company’s increased expenses, inflation and the company’s increased risk as your mortality rate changes.

If you are wealthy, your heirs could be faced with federal estate taxes and other government payments. Estimate how much these taxes will come to and ensure your whole life insurance death benefits are at least that amount. This will avoid your family having to auction off your assets to cover these expenses.

Depending on your age, your death benefit can be as low as $15,000 and for most insurers, there is no cap on the amount of your death benefit. Many insurers offer discounts to policy-holders with a high level of coverage.

The earlier in your life you purchase a whole life insurance policy, the lower your premium rate will be. This is because while you are a young and healthy person, the risk that the insurance company is taking on your mortality is low. There is an excellent chance you will be paying premiums for many years to come.

You can purchase a whole life insurance policy and pay it off in 10, 15, 20 or 30 years. You can increase your premium rate to fit approximately 65 years of payments into 10 years. This will allow you to pay off your policy when you have a high income and low expenses. It also eliminates the risk of losing your death benefit coverage if, at some point in the future, you lose your income or incur large debts.

Your whole life insurance premium rates depend on what you want to include in your policy. Whole life insurance has a wide variety of options and benefits available to enhance the death benefit and savings of your policy.

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