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Whole life insurance, or Whole of Life Assurance, refers to a policy that pays a lump sum on death or, in some cases, the earlier diagnosis of a critical illness whenever it occurs provided the contract is kept in force through the required payments being made. Critical illness insurance or critical illness cover is a contract, invented by Dr Marius Barnard[1], where an insurer makes a lump sum cash payment if the policyholder is diagnosed with one of the critical illnesses listed on the insurance policy and survives a minimum number of days (the survival...
Whole Life Insurance is a rip-off, made for the agents to make more money. Do not purchase this product, consider term life insurance. Whole life insurance is bad because you are paying for an investment and life insurance. You should really handle your insurance with an insurance company and your investments with an investment company, never bundle the two. In whole life insurance no money goes into the cash values for 1-4 years. They have very low rates of return, the average is 1.3%! If you ever want that money you have to borrow it and pay it back at 5-8% interest! (Does that make any sense?) Oh, and by the way, if you die you get one or the other, never both. By Term insurnance and invest the difference!
The level of payout can vary from a fixed sum to one that is wholly dependent on investment performance on what remains after mortality costs and other expenses are deducted.
The level of premium payable may be a single, fixed periodic (e.g. monthly), or a periodic payment that may be reviewed subject to the underlying investment performance and sometimes changes in mortality cost.
Some policies will permit a range of flexibility allowing the maximizing of potential payout over a set period (such as ten years). Once this period is over and the insured individual or individuals are older the cover can be continued for an increased premium or the cover reduced (or somewhere in between between limits). At any time the target benefit can be set for life. These policies are useful, for example, to those who want increased cover while they have dependent children and then want to reduce cover to last their life. An advantage of this over choosing a term policy and waiting until later to replace it with a Whole Life contract is that the individual is underwritten for life and are not restricted or prevented in future cover should they ever have a serious illness such as cancer. Cancer is a class of diseases or disorders characterized by uncontrolled division of cells and the ability of these to spread, either by direct growth into adjacent tissue through invasion, or by implantation into distant sites by metastasis (where cancer cells are transported through the bloodstream or lymphatic system). ...
Types
There are several types of whole life policies. New York State defines six traditional forms: non-participating (aka "non par"), participating, indeterminate premium, economic, limited pay, and single premium.[1] A newer type is known generally as interest sensitive whole life. Other jurisdictions, may classify them differently, and not all companies offer all types. This article is about the state. ...
non-participating All values related to the policy (death benefits, cash surrender values, premiums) are determined at policy issue, for the life of the contract, and cannot be altered after issue.
This means that the insurance company assumes all risk of future performance versus the actuaries' estimates. If future claims are underestimated, the insurance company makes up the difference. On the other hand, if the actuaries' estimates on future death claims are high, the insurance company will retain the difference.
participating In a participating policy (also par in the USA, but known as a with-profits policy in the Commonwealth), the insurance company shares the excess profits (dividends in the USA, bonus in the Commonwealth) with the policyholder. The greater the success of the company's performance, the greater the dividend. For a mutual life insurance company, participation also implies a degree of ownership of the mutuality.[2] A with-profits policy (Commonwealth) or participating policy (USA) is an insurance contract that participates in the profits of a life insurance company. ...
The Commonwealth of Nations as of 2006 Headquarters Marlborough House, London, UK Official languages English Membership 53 sovereign states Leaders - Queen Elizabeth II - Secretary-General Don McKinnon (since 1 April 2000) Establishment - Balfour Declaration 18 November 1926 - Statute of Westminster 11 December 1931 - London Declaration 28 April 1949 Area - Total...
Mutual insurance is a type of insurance where those protected by the insurance (policyholders) also own the organization. ...
indeterminate premium Similar to non-participating, except that the premium may vary year to year. However, the premium will never exceed the maximum premium guaranteed in the policy.
economic A blending of participating and term life insurance, wherein a portion of the dividends is used to purchase additional term insurance. This can generally yield a higher death benefit, at a cost to long term cash value. In some policy years the dividends may be below projections, causing the death benefit in those years to decrease. Term life insurance is the original form of life insurance and is considered to be pure insurance protection because it builds no cash value. ...
limited pay Similar to a participating policy, but instead of paying annual premiums for life, they are only due for a certain number of years, such as 20. The policy may also be set up to be fully paid up at a certain age, such as 65 or 80.[3] The policy itself continues for the life of the insured. These policies would typically cost more up front, since the insurance company needs to build up sufficient cash value within the policy during the payment years to fund the policy for the remainder of the insured's life.
single premium A form of limited pay, where the pay period is a single large payment up front. These policies typically have large surrender fees during early policy years should the policyholder cash it in.
Interest sensitive This type is fairly new, and is also known as either excess interest or current assumption whole life. The policies are a mixture of traditional whole life and universal life. Instead of using dividends to augment guaranteed cash value accumulation, the interest on the policy's cash value varies with current market conditions. Like whole life, death benefit remains constant for life. Like universal life, the premium payment might vary, but not above the maximum premium guaranteed within the policy.[4] Universal Life (UL) is a type of permanent life insurance based on a cash value. ...
The cash value of an insurance contract, also called the cash surrender value or surrender value, is the cash amount offered to the policyowner by the issuing life carrier upon cancellation of the contract. ...
Requirements Whole life insurance typically requires that the owner pay premiums for the life of the policy. There are some arrangements that let the policy be "paid up", which means that no further payments are ever required, in as few as 5 years, or with even a single large premium. Typically if the payor doesn't make a large premium payment at the outset of the life insurance contract, then he is not allowed to begin making them later in the contract life. In contrast, Universal life insurance generally allows more flexibility in premium payment. Universal Life (UL) is a type of permanent life insurance based on a cash value. ...
Guarantees The company generally will guarantee that the policy's cash values will increase regardless of the performance of the company or its experience with death claims (again compared to universal life insurance and variable universal life insurance which can increase the costs and decrease the cash values of the policy). Universal Life (UL) is a type of permanent life insurance based on a cash value. ...
It has been suggested that Variable universal life Insurance be merged into this article or section. ...
Liquidity Cash values are considered liquid enough to be used for investment capital, but only if the owner is financially healthy enough to continue making premium payments. Cash value access is tax free up to the point of total premiums paid, and the rest may be accessed tax free in the form of policy loans. If the policy lapses, taxes would be due on outstanding loans. If the insured dies, death benefit is reduced by the amount of any outstanding loan balance.[5] The cash value of an insurance contract, also called the cash surrender value or surrender value, is the cash amount offered to the policyowner by the issuing life carrier upon cancellation of the contract. ...
Performance Internal rates of return for participating policies may be much better than universal life and interest sensitive whole life because their cash values are invested in the money market and bonds, while par whole life cash values are invested in the life insurance company and its general account, which may be in real estate and the stock market. Variable universal life insurance may outperform whole life because the owner can direct investments in sub-accounts that may do better. If an owner desires a conservative position for his cash values, par whole life is indicated. It has been suggested that Variable universal life Insurance be merged into this article or section. ...
References - ^ Basic Types of Policies (html). New York State Insurance Department. Retrieved on 2007-01-15.
- ^ Alexander B. Grannis, Chair. The Feeling's Not Mutual (html). New York State Assembly. Retrieved on 2007-01-15.
- ^ A Guide to Life Insurance (html). The Association of British Insurers. Retrieved on 2007-01-16.
- ^ glossary (html). Life and Health Insurance Foundation for Education. Retrieved on 2007-01-15.
- ^ Whole Life Insurance (html). The Asset Protection Book. Retrieved on 2007-01-17.
Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ...
is the 15th day of the year in the Gregorian calendar. ...
Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ...
is the 15th day of the year in the Gregorian calendar. ...
Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ...
is the 16th day of the year in the Gregorian calendar. ...
Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ...
is the 15th day of the year in the Gregorian calendar. ...
Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ...
is the 17th day of the year in the Gregorian calendar. ...
See also Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the policy owners death. ...
The examples and perspective in this article or section may not represent a worldwide view. ...
Term life insurance is the original form of life insurance and is considered to be pure insurance protection because it builds no cash value. ...
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