Whole-Life Insurance is the type of insurance you buy if you want to pay a level premium that is fully guaranteed and have lifelong coverage. You can pay the premium over your entire lifetime or you can choose to pay it in full over 10-years, 20-years or paid up at age 65. You can even pay one large premium and be paid up for life.
Whole life insurance is financial protection for your life and your income. The purpose of life insurance is to replace income lost when you pass away. Your beneficiary--the person you chose to receive the replacement money--will receive a check or a series of checks when you pass. In most cases, a beneficiary is a spouse or a child. A beneficiary should always be someone who depends on your income to survive. Whole life insurance covers you for your entire life. A major difference between whole life and term life is that whole life grows cash value. Cash value is somewhat of a savings account within your insurance policy. In the first few years that you pay into the policy, the insurance company charges higher rates than is necessary to insure your life. The extra amount that you pay goes into the cash value account. Cash value grows over time and can be borrowed against if you need cash.
Participating whole life insurance is manufactured by a mutual company where the policy holders own the company and elect board members who annual declare a dividend. A dividend is a return of unused premium and is not guaranteed. However, there are guaranteed cash values and death benefit that are contractual apart from the dividends as long as the stated and scheduled premium is paid.
Whole life insurance is as the name suggests a product designed to provide coverage for your whole life. There are several variations, for ease of understanding, I will cover the base plan.
The cost of insurance increases as you get older and the risk of dying increases, Whole life is based on the level premium principle - you pay more than the cost of insurance in the early years and the excess accumulates. That excess is used by the insurance company to offset the amount at risk to keep the premium level.
If you have further questions, please do not hesitate to contact me,
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The cost of insurance increases as you get older and the risk of dying increases, Whole life is based on the level premium principle - you pay more than the cost of insurance in the early years and the excess accumulates. That excess is used by the insurance company to offset the amount at risk to keep the premium level.
If you have further questions, please do not hesitate to contact me,