Whole life insurance is common among several individuals. It’s, infact, one of the most common types of life insurance available. However, many people aren’t aware that there are several variations of whole life insurance. Keep reading to learn more about the different variations available.
Variations of Whole Life Insurance
Economic
This strategy combines participating and term life insurance, with a percentage of the savings going toward further coverage. This may frequently yield a greater death benefit at a cost to the long-term cash value. The death benefit may be reduced if dividends do not meet expectations in certain policy years.
Limited pay
Normally, you could pay premiums yearly for the rest of your life. However, limited pay plans only demand payments for a certain number of years, such as 20. They might be participating or non-participating.
You might also set the insurance to expire at a certain age, like 65 or 80. The insurance itself continues for the life of the insured. These plans would typically cost more upfront. However, with participating plans, you have the option of paying premiums more quickly.
Single Premium
This type is limited in that it comprises a single, large payment made at the beginning of the pay month. If the policyholder decides to use their insurance, they may incur expenses in the early years of their contract.
Interest sensitive
This sort is new and is known as either “excess interest” or “current assumption” whole life. The policies are a combination of traditional full life and universal life.
Here, the interest on cash value doesn’t depend on dividends to raise the guaranteed cash value accumulation. Instead, the interest on the policy’s cash value swings in reaction to market conditions.
The death benefit does not fluctuate throughout the course of one’s life. The premium payment may vary, but it won’t exceed the maximum premium guaranteed by the insurance, just as with universal life.
