Posted: December 29th, 2011 | Author: admin | Filed under: Life Insurance | Tags: Cash Value Insurance, College Tuition, Death Protection, Insurance Life, Insurance Payout, Insurance Salespeople, Investment Component, Investment Management, Level Premium, Life Insurance Coverage, Life Insurance Policy, Life Insurance Premiums, Ordinary Life, Permanent Life Insurance, Policyholder, Rate Of Return, Straight Life, Term Life Insurance, What Is Whole Life Insurance, Whole Life Insurance | No Comments »
A lot has been written about whole life insurance. Is it a good or bad type of insurance? It is not so easy to say that. We can now look at some of the bad about and benefits of whole life insurance.
What is whole life insurance?
Whole life insurance may also be recognized as ordinary life, straight life or permanent life insurance.
It is a life insurance policy that provides death protection for the insured person’s entire lifetime. An insurance payout is made to the contract’s beneficiaries when the insured person dies.
It consists primarily of the mortality charge which is the part of your premium that pays for the life insurance coverage. The secondary part of your premium pays for an investment component which builds up a cash value that the policyholder may withdraw or borrow against. The policyholder typically pays a level premium for his whole life, although some policies may differ in this respect.
What may be bad about whole life insurance?
* Life insurance is intended to substitute a paycheck and care for a family that still relies on your income. Most people do not have life insurance after the age of 65.
* Whole life premiums are far more costly than term life insurance premiums.
* Whole life is pricey because you are paying for a life insurance policy as well as an investment.
* The rate of return on a whole life insurance policy is very low when judged against other investment opportunities.
* Whole life insurance should not be used exclusively as an investment.
* Policyholders have no input into the investment management process of a whole life policy.
* It may take at least 10 years for a whole life insurance policy to gain any real cash value.
* Insurance salespeople have a tendency to push a whole life insurance policy because it conveys a bigger commission.
* Using whole life to support college tuition for a child may be unwise.
What may be the benefits of whole life insurance?
* The policyholder often pays a level premium for a whole life policy.
* The tax benefits and cash value is an added bonus when purchasing a whole life policy.
* Most policies also offer a withdrawal clause. This allows the contract holder to terminate her coverage and receive a cash surrender value.
* Some of the money you pay into your whole life insurance policy amasses as guaranteed cash values.
* The income on the cash value of a whole life insurance policy collects tax-deferred.
* The income on the cash value of the policy can be borrowed against in the shape of a policy loan.
* Whole life policies may earn dividends which can result when actual life insurance costs turn out to be less than what was understood in determining the premiums.
* You have lifelong coverage with no future medical exams unless you make a change to your policy.
That was some of the bad about and benefits of whole life insurance policies. If you want to know more I suggest you read up about the subjerct online or ask your local life insurance company.
Posted: December 17th, 2011 | Author: admin | Filed under: Life Insurance | Tags: Accumulation, Cash Values, Estimates, Financial Commitments, Insurance Life, Insurance Premiums, Insurer, Investment Income, Level Premium, Level Premiums, Life Insurance Coverage, Life Insurance Policies, Life Insurance Policy, Life Policies, Mortality, Policy Contract, Policy Features, Stay At Home, Whole Life Insurance, Whole Life Insurance Policies | Comments Off
Whole life insurance may be a good choice if you have extended future goals. Whole life generally offers level premiums and the accumulation of cash values. The guaranteed cash values may also provide you with money in the future to help with temporary needs.
Do you need life insurance coverage?
You may consider purchasing life insurance:
* If you become a parent.
* If your family does not have a lot of money saved.
* If you are a stay-at-home parent.
* To cover the mortgage or other large shared financial commitments.
The different types of whole life insurance policies you may choose from.
To help you choose the best whole life insurance, you may first need to know more about the different types of whole life policies you can choose from.
Level Premium Whole Life Insurance:
This whole life policy features premium payments that are:
* level.
* are required to be paid as long as the insured is alive.
In the early years the premium is more than enough to pay the current cost of insurance security. The surplus makes up the insufficiency of premiums in later years when the annual premium is not sufficient to pay the yearly cost of insurance. These extra premiums are held and invested by the insurer. This creates the cash value of the policy.
Indeterminate Premium Whole Life Insurance:
This type of whole life policy is similar to an ordinary whole life policy save for it providing adjustable premiums. The company will charge a premium based on its current estimate of expenditure, investment income and mortality. The company will adjust the premium in view of these estimates changing in later years. It will never be adjusted above the maximum guaranteed premium declared in the policy contract.
Single Premium Whole Life Insurance:
Single premium whole life is a limited payment whole life insurance policy with one quite large premium payment payable at issue. The policy is fully paid up and no further premiums are necessary. Owing to the single premium payment the policy will have an immediate cash and loan value. This could be considerable depending on the sum of the single premium payment.
Limited Payment Whole Life Insurance:
This whole life policy gives you life insurance protection but involves only a limited number of premium payments. The premium payments will be higher than with an ordinary whole life policy since the premiums are paid over a shorter timespan. Limited payment plans can provide for the payment of premiums for a set number of years such as 20 payment whole life insurance.
Participating Whole Life Insurance:
This whole life policy pays dividends corresponding to:
* the positive experience of the company.
* results from surplus investment earnings.
* favorable mortality.
The dividends may be:
* paid in cash.
* used to decrease your premium expenses.
* left to build up at a particular rate of interest.
* used to buy paid-up supplementary insurance.
Non-Participating Whole Life Insurance:
A non-participating whole life policy has a level premium and a fixed insured amount during your entire life. However, this policy does not pay out any dividends.
You may contact your insurance broker or a life insurance company for more information about the best whole life insurance for your personal life insurance needs.
Posted: November 23rd, 2011 | Author: admin | Filed under: Life Insurance | Tags: Beneficiaries, Cash Surrender Value, Contract Holder, Death Protection, Insurance Life, Level Premium, Life Insurance Policy, Ordinary Life, Policyholder, Whole Life Insurance | Comments Off
Whole life insurance may be sometimes be branded as permanent or ordinary life insurance. Here is a closer look at this type of life insurance policy.
A definition of whole life insurance:
* It is a life insurance policy that offers death protection for the insured person’s whole lifetime.
* An insurance payout is made to the contract’s beneficiaries when the contract holder dies.
* It includes an investment part which may gather a cash value that the policyholder can borrow against.
* It presents a withdrawal clause which allows the contract holder to terminate her coverage and collect the cash surrender value.
* The policyholder typically pays a level premium which does not rise as the person ages.
* The earnings on the cash value of the policy gathers tax-deferred.
* The insured person may borrow money against the policy’s cash value in the form of a policy loan.
Different types of whole life insurance policy:
* Single premium whole life insurance.
A limited payment whole life insurance policy with one relatively large premium payment due at issue. The policy is fully paid up and no further premiums are required. Due to the single premium payment the policy will have an immediate cash and loan value.
* Indeterminate premium whole life insurance.
An indeterminate premium whole life policy is similar to ordinary whole life plan of insurance except that it provides for adjustable premiums.
* Level premium whole life insurance.
Level premium whole life insurance features premium payments that are level and are required to be paid as long as the insured is living.
* Limited payment whole life insurance.
If you want to pay premiums for a limited time, the limited payment whole life policy gives you lifetime protection but requires only a limited number of premium payments. Limited payment plans can provide for the payment of premiums for a set number of years.
* Non-Participating whole life insurance.
A non-participating whole life policy has a level premium and face amount during your entire life. Since the policy is non-participating it does not pay you any dividends.
* Participating Whole Life Insurance
A participating whole life policy pays dividends. Dividends may be paid out in cash.
* Child whole life insurance.
Parents or grandparents may consider buying child life insurance. Child life insurance premiums are substantially less expensive. Child life insurance guarantees your child life insurance protection for the rest of their lives. However, you may want to be careful about using whole life insurance to support a college tuition.
Wealthy people may sometimes use whole life insurance policies as an estate-planning medium. They may set up an insurance trust to apply the earnings of the policy to their estate taxes when they die. That may save their inheritors the sizeable cost of settling the estate.
That was a closer look at the definition of whole life insurance and the whole life insurance policy. You may still want to find more specific answers about life insurance. I suggest you to look for the answers to your questions either online or feel free to ask your local life insurance company lawyer.