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Whole Life Insurance

Whole life insurance is also known as whole life assurance, especially in Commonwealth countries. This is a kind of life insurance that remains in force for the insured person’s entire life. In most cases, it requires premiums that are meant to be paid in an annual basis into the policy. As a matter of fact, all kinds of life insurance were originally termed as insurance. However, since the term life insurance only pays a claim when a person dies during a stated term, many policy owners become very much upset with the idea that they are paying premiums for twenty or thirty years and then have nothing from it when they need it most.

Whole Life Insurance Premiums

In accordance to the market pressures that are evidently happening around, insurance policies with level premiums and are higher than traditional terms offer cash value. This cash value was made to cash reserve that would accumulate against the known claim which is the death benefit. These types of policies would also credit interest to the cash value and upon the maturity of the insurance contract; this usually occurs at the age of 95 or 100. Here, the cash value would soon equalize with the death benefit.

With this kind of set up, this will create a good relationship between the insured and the insurer. By having the death benefit, the policy holder is assured that the insurance coverage stays in force when the insured person dies. On the other hand, the insurance provider has also benefited because for every premium payment made, thirty percent of the amount is considered as an overcharge or is purely profit. With this, cost of insurance increases while premiums remain stable.

In fact, there are several types of whole life insurance policies. The New York State actually defines six traditional insurance forms:

  • Non-participating, also known as non par
  • Indeterminate premium
  • Participating
  • Single premium
  • Economic
  • and Limited Pay

A newer type of insurance is generally known as interest sensitive whole life insurance. There are many types of insurance policies and they are usually written in their contracts while abiding with the law’s guidelines.

The major requirement in getting whole life insurance is consistency of payment. This means that the person should make his payment regularly. If the insured is not able to make the big amount of payment required by the insurance at the outset of the insurance contract, he is not permitted to start making them at the later part of the contract life. However, some whole life insurance contracts offer riders which allow one time, occasional, or large additional payment for the premium. And of course, cash value is one of the great features of a whole life insurance. This usually increases depending on the company’s performance or experience with death claims.