Whole life insurance, often called the “straight life” or “permanent life,” is an insurance that guarantees coverage throughout the insured’s lifetime, provided that the insured has paid the amount due until policy due date. Whole life insurance is a cash value type of insurance to be paid to the beneficiary in the event of death. The other term can be used as savings whenever the insured needs money while alive.
Types of Whole Life Insurance
Interest Sensitive Whole Life Insurance
This is a combination of universal life policies and whole life insurance. It has the same goal where an amount is paid to the insured or the beneficiaries, provided that the insurance policy is up to date.
Interest-Sensitive life insurance is recommended for mortgage payments or used as debt payments or to fulfill a specific life goal such as for college tuition. Additionally, the policyholder can borrow from the accrued value without interest.
Single Premium Whole Life Insurance
Single premium life insurance is cash invested that builds up quickly since it is fully funded. The amount received from this type of whole life insurance depends on the amount invested, health status, and the age of the insured.
An example would be a young man investing in single-life insurance. The insurance company then takes into consideration the young man’s life expectancy which is generally longer compared to a 50-year-old man. The amount invested by the younger man has more time to grow and gain interest. As a result, the larger the amount invested, the higher or greater the amount of death benefit to be paid out.
Traditional Whole Life Insurance
This type of whole life insurance provides guaranteed amount to the insured or to the beneficiaries in the event of the insured’s death, provided that the policy is paid in full or maintained. Traditional whole life insurance has the ability to accumulate wealth since it guarantees the return of cash value from dividends and interests.