Whole Life Insurance

The Whole life insurance policy is ranked among one of the most favorite policies across the globe. Whole life insurance, also known as permanent insurance, offers a death benefit in case the life insured faces loss of life. The beauty of the product is that your loved ones can avail this facility even if you continue to live to 100.

The whole life or permanent life insurance is usually divided in to three major categories namely.

  1. Traditional whole life
  2. Universal life
  3. Variable universal life

Traditional Whole Life Insurance

As per this type of life insurance policy the benefit of death as well as the premium are structured to be the same the whole life, of the policy. In this case, the cost per $1, 000 of plan rises as the insured gets old. The benefit gets really high if the insured continues to live up to 80 and beyond.

Under this scheme, the company charges a premium from the ensured each month. This premium rises each year. It is quite difficult for an ageing person to pay higher premiums on a monthly basis. Keeping this factor in mind, the insurance company usually keeps the premium level by keeping a premium that, in the previous years, is more than the amount required to pay off the insurance claims, utilizing that money & utilizing it further to compensate the level premium. This helps the older people to pay the heavy price of life insurance.

As per the Law, when these types of ‘over payments’ of a life insurance policy reach a specific amount, they are obliged to become offered to the policy owner as a cash value benefit in case he/she opts to discontinue with his or her original life insurance policy.

The cash value is actually an alternative available to the policyholder and not a bonus, under the policy.

In the 1970s and 1980s, life insurance companies introduced two variations on the conventional whole life insurance. They came to be known as:

  1. Variable Universal life insurance.
  2. Universal life insurance.

The whole life insurance policy is more famous among people across the globe. A survey conducted proves that around 7.1 million whole life insurance policies were bought in the year 2003. A tremendous increase in this amount is also expected in the near future.

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