Life Insurance Quotes

What Are the Types of Traditional Whole Life Policies?

What Are the Types of Traditional Whole Life Policies?

Besides your usual form of whole life insurance, which is the type that covers your life until anywhere between the ages of 90 and 100, there are other types of whole life policies that individuals choose as well. In other words, there are more options than what many individuals think there are. It is these options that allow them to find the policy that is right for them.

Overall, whole life insurance has the same functions, including being able to borrow against your policy, no matter the type of policy. First of all, it is interest sensitive. Second of all, it is going to provide a death benefit to your loved ones that will enable them to pay your final expenses when you pass away.

Types of Whole Life

The differences between the different types depend upon the payment options. For example, your traditional policy allows you to pay on a monthly, quarterly, bi-annually, or annual basis. Usually, paying annually will save you money because insurance companies prefer that premiums to be paid annually. The odds that the policy will lapse are reduced significantly.

So the second type of whole life insurance you have is single payment life insurance. This is for those who can afford to pay their policy up in full. For instance, the policy will insure an individual until the age of 90. The annual premium may be $360 per year and you are currently 30 years old. That means you are going to pay up 60 years in premiums for a total amount of $21,600. Of course, this amount is significantly less than the death benefit that your family will receive.

There is also the limited pay option. This means that you can be insured until you're 90, but pay your premium for the next 20 years. So your $21,600 will be divided amongst 20 years. The annual cost would be $1,080. After the 20 years, you don't have to pay anymore. You don't have to worry about a lapsing policy and you don't have to worry about losing your coverage in any way. It is guaranteed.

So if you're 30 years old and you choose the limited option, you can be paid up by the time you are 50 and not have to worry about it again. This is an option that many choose. Although the annual premium is hundreds more, everything is taken care of in a fraction of the time.

Interest Sensitivity

The interest sensitivity of whole life policies enables the policies to gain cash value. This means that they gain interest over the life of the policy. How this works is the insurance company invests a portion of your premium into investments that they choose. From there, the policy gains cash value.

When you pay the higher premium amounts via single pay and the limited premium options, you will find that the cash value accumulated will be greater. Basically, the concept is the same as any investment; the more you invest, the more interest you are going to gain.

In a way, this makes whole life insurance a type of savings/investment vehicle. If there is ever a time in which you need cash, you can turn to the cash value that your life insurance policy has accumulated. It does take a while for it to accumulate, but it will be there sometime in the future. When you borrow, you then pay it back like you would any loan. It is this feature that is one of the reasons why the various types of whole life insurance are so popular because the cash value also supplements the death benefit.

ING Transamerica Insurance and Investment Group American General Life Companies Prudential Genworth Financial Services SBLI Life Insurance Company

Get Quotes From Multiple Carriers

Zip Code:

Compare Rates Now

Protect your familyTODAY.

Save up to 70% on Life Insurance Rates!