Life Insurance

Types of whole life insurance

Life insurance policy is not just something that you take to provide for your families, which are depending on you in the event of your death. You can also take out one in which your mentioned beneficiary is a charity that you feel very much about and which you have made some efforts to help.

When you consider taking up whole life insurance, you need to look into the many types that are offered by insurance companies. Each policy type has specific features and advantages and your choice should be based on how well the features satisfy your needs.

Here is a look at the many types of whole life insurance policies:

• Non-participating - In this type of whole life insurance, you and the insurance company will decide on all policy-related values such as premium amount, death benefits and so on, right at the outset. After the amount is set and the policy signed, it is sealed, which means no changes will affect the value in the future. In the event that future claims are lesser than expected, the insurance company will pay up pay up the difference, on the other hand if future claims are higher than expected, the insurance company will not pay the difference.


• Participating - Here you are offered a share in the insurance company's profits, so the higher the insurance company earns the higher your profits. Policies similar to this are the economic whole life insurance policy and the limited pay whole life insurance policy. In both, you receive dividends from the company's profits. However, the economic policy type is a combination of participating policy and term life insurance policy, wherein a part of the dividend is used to policy additional term insurance, while in the limited pay policy you pay premiums only for about a couple of years, but you get insurance coverage for your whole life.


• Indeterminate premium - In this type of whole life insurance, you are offered dividends or share in the company's profit every year, but each year you can expect this amount to vary.


• Single premium - In this type of whole life insurance you pay a single large premium and the policy with pay out death benefits to mentioned beneficiaries.


• Interest sensitive - In this type of whole life insurance the interest you receive from the cash value of the policy will change from year to year depending on market values.



Be sure to read all the terms and conditions of the policy you want to take before you sign up for it. You should know the conditions under which claims can be based and how much of return you will receive by way of dividends from your policy. Doing this will help you to make a more informed decision.



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