Sep 09 2008
The Basics of a Whole Life Insurance Policy
A Whole Life Insurance, as the term indicates, covers a policy that serves effective throughout the life of the insured person. Typically, the insurance owner will be required to pay premiums which can be arranged to be funded in a number of yearly payments or one-time payment comprising a large premium sum. For many, this type of insurance is thought of as a good foundation towards a financial stability that can last through lifetimes.
Whole Life Insurance policies can be categorized into six traditional types as defined by the state of New York.
- Participating. With this type of insurance policy, the dividends or the superfluous profits made by the success of the company will be refunded or shared with the insurance holder.
- Non-Participating. Also referred to as non par, this form has insurance values that are pre-determined which usually remains unaffected during the course of the contract, no matter the issues that arise.
- Indeterminate Premium. Just like with the Non Par form, this type of Whole Life Insurance offers a fixed portion of the maximum premium where the premium may change yearly.
- Limited Pay. Poses features quite similar to Participating with the difference of having to pay premiums that are set for a certain time span. This Whole Life Insurance may be arranged in such a way that the policy will be paid fully at the time the holder reaches a specified age but the policy remains effective for life.
- Single Premium. This type requires a funding that entails a single advance payment.
- Economic. Is a form of Whole Life Insurance where a fraction of the extra profit will be used to buy additional terms in the insurance, thus making up for a higher yielding death benefit.