Whole Life Premium – How to Get it Cheap
Whole life insurance, also known as “whole of life” insurance, either alone, sometimes called “pure insurance” or “normal insurance” and sometimes also known as “continued insurance,” is a life insurance coverage that is guaranteed to stay in force throughout the life of the insured, as long as necessary premiums are paid. Whole life policies have two essential features: they are renewable and they include an death benefit that pays a cash amount upon the death of the insured. In addition, whole life policies also have a variable premium that lets you control how much you pay. Thus, whole life insurance policies are not tied to any particular investment, so you can borrow against them or even take out a loan. However, whole life policies have a number of disadvantages.
Whole Life insurance policies are purchased by financing through a Term Life Insurance Company, which is a sub-insurance company of the insurance companies. Term Life insurance companies provide coverage only for the period specified in the contract, and therefore whole life is usually not purchased because term life is usually more affordable. Term Life insurance companies usually buy back the whole life policy at the end of the term. Therefore, Term Life insurance is purchased when one wants to purchase a family insurance policy, not when one wants to purchase another individual insurance policy.
The cash value of a whole life policy accrues according to the policy holder’s premiums and the insurer’s stated death benefit and the life expectancy of the insured. When premiums are paid in full, the face value of the whole life policy is paid to the insurer; when premiums are unpaid, the insurer may decide to either give back the whole life policy to the insured, or sell it to another buyer. When the policy is sold, the outstanding balance will be returned to the insurer. This means that there are some risks involved in whole life insurance.
There are different types of whole life insurance policies. Permanent whole life insurance policies are also known as pure insurance policies. These are usually taken out with a 50-year premium. While the premiums will remain constant, the value of the death benefit does gradually decrease over time. A permanent whole life insurance policy will pay out the death benefit even if the insured dies during the first five years of the policy.
Another type of whole life insurance policies is the variable whole life insurance policies. These policies give the insurer a lifelong option to shift the risk of loss between two different plans. In a variable whole life insurance policy, the insurer can choose to move the risk of cash value from a decreasing cash value plan to one with a higher premium. Alternatively, in case of a decreasing cash value, the insurer can choose to move the risk of appreciation. However, both options have different effects on the cash value of the plan and premiums payable.
In addition, both whole life insurance policies and term policies can be renewed after their term has expired. This renews the plan and allows for additional withdrawals or borrowings. If the insured wants to opt for another term policy, the new term policy will only pay the same amount as the original term policy.
Lastly, some whole life policies allow the policyholder to invest in an asset. Usually, these investments are stocks or mutual funds. The advantage of investing in stocks is that there is guarantee that the investment will produce a return. Moreover, the benefit of mutual funds is that the investment can grow according to the performance of the stock market. If the invested money performs well, so does the profit.
There are many options available to a policy holder. It is up to him or her to decide which option is the best one for his or her individual situation. As long as the insurance company is happy with the prospect of sales, the whole life premium will remain unchanged for a long time to come.