What is Whole Life Insurance? Whole Life Insurance is a life insurance policy which is designed to insure a person’s whole life. In whole life insurance, the insured person has to pay the premium every year. Whole life insurance is also known as Whole Life Assurance.
As the term life insurance policy pays back the amount when the insured person dies, people were upset as they would be paying premiums for more than 20 to 30 years and the benefits are only applicable when the insured person dies. So the whole life insurance came into picture. Whole life insurance policy also credits the interest on cash value. In this policy, if the person is willing to borrow the interest then the amount with the interest will be paid. If the person dies, then the amount will be paid to the beneficiary.
There are different types of whole life insurance policies. New York State has classified the whole life insurance six types. They are:
• Non-Participating: When the policy is issued, all the values related to the policy are verified at the time of issuing the policy. Once these values are determined, they cannot be altered after the issue of the policy. • Participating: In this policy, the insurance company shares its profit with the policy holder. The amount that is shared is not taxable as it is considered as the overcharge or interest of the premium.
• Intermediate Premium: This policy is similar to the Non-Participating policy except that the premium may differ from year to year.
• Economic: According to this policy, a part of the dividends is used to buy the additional term insurance. This gives you the death benefit.
• Limited Pay: This policy is similar to the participating policy except that this policy is only due for some specific number of years. This policy may be fixed to be paid after certain age.
• Single Premium: This is the form of limited pay. In this policy the pay period is single large payment up front. In this policy, the policy holder has to pay only during the early years of the policy.
• Interest sensitive: This policy is also known as excess interest or current assumption whole life. This policy is the combination of traditional whole life insurance and Universal Life insurance. In this policy interest on the policy’s premium may vary according to the current market conditions. The whole insurance policy will assure that if the person dies then the premium amount will be given to the beneficiary. The insurance company permits the beneficiary to choose whether he require the death benefits or cash value, however he is not allowed to choose both.
An Explanation of Whole Life Insurance
Whole life insurance refers to a policy that pays out an amount of funds to the selected beneficiaries upon the passing away of the policyholder The policyholder is supported for life
Defining Whole Life Insurance
Whole life insurance may be sometimes be branded as permanent or ordinary life insurance Here is a closer look at this type of life insurance policy
