Whole Life Insurance is a form of permanent insurance that covers one for his or her entire life or up to a certain age such as 99 or 100. The expression "Whole Life" may not necessarily refer to the period that payments (known as premiums in insurance terminology) are paid. It refers to the period of which the insured is protected. A whole life insurance policy will usually cover a person against death. As long as premiums are paid, the death benefit will go to his or her beneficiaries. In the case of a whole life policy which tends to be participating in nature, the policy will tend to accumulate value in the form of bonuses over time. This means one will be able to receive a greater payout than the original sum assured. In the event that a policy covers against total and permanent disability, the sum assured will also be activated should the insured meet with such an occurrence.
Because a whole life policy is usually participating in nature, the policy also tends to have a cash value which gives the owner the choice of taking policy loans, converting the policy to a paid up policy and getting some money back if one chooses to surrender the policy after a period of time. It is generally not recommended to do so as one would lose coverage and may not get back an amount which commensurates to what was paid to the policy.
As the policy is able to grow in value, the premiums will tend to be higher compared to a term policy and may be made in regular payments or in a lump sum (known as single premium insurance).
Common features of Whole Life Insurance:
- Protects against death and/or total permanent disability for life or up to an advanced age.
- Accumulates bonuses which add on to the basic sum assured for greater death benefit (for participating policies)
- Has cash value which is indicative of how much one would get should one decide to surrender the policy (for participating policies)
- Premiums will tend to be higher than that of a normal term policy.
- May have policy loan and non-forfeiture options.
1 comment:
life insurance for diabetics will provide the financial protection to your loved ones should the unfortunate happen.Your family (or nominated beneficiary) will receive a lump sum of money which can be used to settle any financial matters you may leave behind such as any personal debts, mortgage, car finance etc.It can also provide a financial cushion at a much needed time to help your family adjust to the loss of income.
Post a Comment