Whole Life Insurance is a life insurance policy that remains in force for the insured's whole life and the beneficiaries receive insurance claim upon the death of the policy holder. These insurance policies are quite expensive and thus must be purchased only if the person can afford it. The rate of premium depends on the health condition of the insured person, credit scores and the face value of the insurance plan.
The premium rates usually stay relatively constant throughout the duration of the policy.
There are many types of whole life insurance policies such as-
- Non-participating policy: The death benefits, premiums and all values related to the policy are fixed in the beginning and usually cannot be changed after the policy is issued.
- Participating whole life policy: In this type of insurance policy, the insurance company shares profits and pays dividend to the policy holder.
- Limited payment whole life policy: For those who want lifetime protection and wish to pay premiums for a specified time, limited payment insurance policy is suitable for them. The premium payments for this life insurance policy are higher compared to other whole life insurance plans.
- Single premium: For those who have large amount of money, single premium whole life insurance is suitable as it requires one large premium payment.
- Indeterminate premium: This insurance policy provides adjustable premiums to the policy holders. The premium will never go above the maximum premium guaranteed in the policy.
Whole life insurance policy builds up cash value and if the policy owner surrenders the policy at a later date, the cash value is returned. The policy owner can also borrow money from the cash value as a loan which has to be paid back later. For those who wish to have a life insurance policy for the entire lifetime, should opt for whole life insurance as the premiums remains same and it also provides added advantages like tax benefits and cash value.
