Types of Whole Life Insurance
August 22, 2009 |
Featured, Whole Life
At any time there are several things that could potentially happen to an individual. Life by its very nature is unpredictable and can leave people feeling vulnerable and unbalanced. They are unsure of how things really are and often do not know how to cope when unexpected events occur in their life. It can be very stressful when these things happen. Just the fact that it comes unexpected can in itself be a problem, as people find they need to adjust as soon as possible to the misfortune. Many unexpected events have negative consequences and can be very inconvenient.
A sudden and unexpected death in one’s family is probably the absolute worst type of surprise of all. It is not only taxing emotionally but can cause the family financial burdens as well. However, it is possible for an individual to protect their family from this type of inconvenience. An individual can buy whole life insurance to protect his or her family from these types of financial problems that can result if he or she dies unexpectedly.
The term on a whole life insurance policy covers the rest of the insured person’s life. The policy provides financial security for family members who may suffer monetarily if the insured individual dies. There are several different ways that whole life insurance can be paid for. Normally a whole life insurance policy is paid on an annual basis. There are also different types of whole life insurance policies. In fact there are six different types:participating, non-participating, economic, indeterminate, single premium and limited pay.
There are some important differences between each of these different types of whole life insurance. With non-participating, all of the values that relate to the policy are determined when the policy is issued. What this means is that if for whatever reason the values should change during the life of the policy, the value that was agreed upon when the policy was issued would continue to be that value that was paid out.
With indeterminate whole life, the only difference is the premiums. What this means is that the premium amount may vary from year to year.
Limited pay whole life limits how many years that premiums must be paid. Insurance premiums usually must be paid every year for the life of policy or you may lose the policy along with the benefits and security that the policy brings. With a limited pay policy, the insured only has to pay premiums for a certain number of years that is agreed upon when the policy is issued. So in order words the insured may only have to pay premiums for, as an example, 20 years and the policy still remains active for the rest of their lifetime.
Whole life insurance can be a very good way to protect one’s family for an individual’s entire lifetime and after. It is important these days that people understand that they need to not only take care of themselves but their family members and loved ones as well.
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