April 20, 2018

Whole Life Insurance

Whole life insurance is sometimes referred to as permanent insurance. It is designed to provide protection for the whole life of the insured. Cash value accumulates within the policy as illustrated below:

whole life insurance

Assume the face value of the above policy is $50,000. The first day the policy is in force, the insured has $50,000 of protection. If the insured should die one week later, one month, one year, or 50 years later his beneficiary would receive $50,000. Because the face amount of the policy is payable upon death, the risk of the insurance company is drastically different than term life. Someday, the insurance will pay the beneficiary $50,000. They just don’t know when it will be.

Most of the life insurance companies will partner with have whole life policies. This include:

  • John Hancock
  • Prudential
  • West Coast Life
  • ING
  • Genworth
  • BannerLife
  • MetLife

and many others…

Types of Whole Life Policies

Continuous Premium Whole Life is the most common type. these policies stretch the premium payments over the whole life of the insured (to age 100). This type of policy is often referred to as straight life insurance.

Limited-Payment Whole Life policies allow the policyowner to pay for the entire policy in a shorter period. The premium for any whole life policy can be broken down into any desire number of payments. This is for those people who don’t like the thought of paying premiums for their entire lives.

Some other less important types of whole life insurance are single premium, current assumption, economatic, and interest-sensitive whole life.

(Read more about the advantages and disadvantages of whole life insurance…)