Main Types of Whole Life Insurance

Whole life insurance is a type of permanent life insurance. That means it is never ending, for as long as you live. You can start this type of policy as a young person with a family or as a senior of 65. A whole life insurance policy is all-encompassing and includes the death benefit for your family and the cash value for yourself. You and your insurance agent can choose the amount of coverage you want and the premium payment schedule. First, you should learn about the different types of whole life insurance as well as the different ways you can use it, such as borrowing against your policy. You can choose from several variations.

Non-Participating Policy

A non-participating whole life insurance policy means that the policyholder does not participate in the company's profit sharing. They do not get dividends at the end of the year. On the upside, this type of policy has features that are determined upfront. You and the agent will decide on the face value, premium payment, cash surrender values and more. These will not change during the lifetime of your policy.

Participating Policy

In opposition to the non-participating policy, a participating policy is one in which you get bonuses from the insurance company every year. These bonuses are based on the company's profit margin, so they vary from year to year. You may not get any dividends if the company does not perform well.You can choose to take this risk. Policyholders with this type of plan pay a little more for the premium in order to participate in the dividend sharing.

Single Premium

A single premium whole life insurance policy means that the policyholder pays for the entire policy in one lump sum. There are no more necessary payments after this amount has been satisfied. The policyholder will get lifetime coverage plus the cash value and will never have to pay another fee (unless he cancels the policy).

Limited Pay

This type of plan is similar to a single premium plan, but the policyholder pays premiums for a certain number of years and then stops. The premiums are larger than what someone would pay monthly but smaller than a single premium plan.

Indeterminate Premium

The premium amount is based on the market conditions and varies every year. That means you never know how much you will be paying until you get the bill. However, the premium can never rise above a certain threshold set by the company. You will not have to worry about paying thousands of dollars for a single premium payment because of this limit.

Economic Life Insurance Policy

This policy is a combination of term life insurance and participating insurance. You get a dividend bonus every year, but you use it to buy extra years on your term policy. It is considered "the best of both worlds." Most policyholders with an economic whole life insurance policy receive a bigger death benefit but their cash value will not be as large as it might be with a non-participating policy. If the insurance company does not perform well one year, your death benefit amount may dip slightly.

As you can see, you have several choices to make when selecting from the main types of whole life insurance. Start now by obtaining some free quotes right on this website from insurance agents. They can give you estimations of rates, features of the different policies, and help you compare plans. Your overall goal with a whole life insurance policy should be to give your beneficiaries the biggest death benefit possible. How you reach that goal is up to you and your insurance company.