The Advantages in Whole Life Policies

life policy insurance

While term policies involve insurance for a specific period, whole life policies give you monetary safety for your entire life. Payments and benefits of death of the holder are similar for both policies. You can build savings on a whole policy, which are tax-free returns of a percentage of the premium you pay. You can even take loans on these savings.
The returns on whole life policies are quite small even with it being tax-free. You are better advised in using a policy as a tool of investment. However, you must always choose a policy on the basis of the protection it offers rather than look for a return on it. Moreover, the cash savings and tax savings should be considered as extra benefits while buying a policy.
There are many types of whole life policies. There are 6 conventional types in the US such as participating, non-participating, single premium, indeterminate premium, economic and limited pay types. The whole life insurance based on interests is a quite a new kind of policy. Other governances could classify these policies differently and may not be available with all insurers.
A whole policy gives you protection for your lifetime at premium costs that are limited. The amount of premium is comparatively higher than the common whole life policies even if for a limited period. You can reap benefits of limited period payments. The entire whole life plan can be bought over a limited period with 10 or 20 payments. You can buy these limited period policies on the basis of age and pay till a certain age like paying premiums till the age of 65 or 85 when the policy gets paid up.
Conventional whole life policies have consistent periods and amounts of premium payments throughout the life of the policy buyers. There are but some whole policies where you can pay up the costs in one installment. Short time policy buyers pay a higher amount of premium. As is with whole life plans, you can pay premiums till an age defined.
In participating policies of whole life there are no guarantees to dividends. You can however, have the premium costs settled against dividends that you are due to receive. You can also surrender such policies. With the amount received from surrender of a policy you can invest in cheaper plans or buy a term policy for a specific number of years. Look for provisions of these kinds in the section on non-forfeiture in your whole life plan.

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Life Protection Insurance

life policy insurance

Life insurance pays out cash when the policyholder dies, generally to guard against financial difficulties for loved ones and dependents.
Life protection insurance is offered to single or joint policyholders and can include extra benefits, including settling claims if a terminal illness is diagnosed.
There are several types of life insurance:
Term insurance
Term insurance is like the title infers - lasting for a fixed period - and comes in several types:
· Level term insurance
This pays out if the policyholder dies while the policy is still in force. The sum assured - the amount the insurer agrees to pay on the policyholder's death - is guaranteed throughout the term.
· Decreasing term life insurance
Often called mortgage protection cover, the sum assured is tied to a repayment mortgage and decreases throughout the life of the policy as the amount of the loan decreases. The policy generally reduces to zero and dies with the mortgage.
· Renewable term insurance
This policy has a fixed term with an option to renew without a health review.
· Convertible term insurance
Level term insurance that can switch to a whole life or endowment insurance policy.
· Increasing term insurance
Consider this in a time of high inflation that eats in to the value of any sum assured. Increasing term insurance is, unsurprisingly, the opposite of decreasing term insurance, adding to the sum assured.
· Index linked term insurance
Some insurers allow the sum assured and the premium to increase each year in line with the Retail Price Index.
'Whole of life' insurance
This policy is open-ended and guarantees a pay out when the policyholder dies, providing payments are maintained in line with the policy schedule. Like term insurance, whole of life comes in several types:
· Non-profit whole life policies
The policyholder pays the same premium every month and the policy pays out a fixed cash amount on death.
· With profit whole life policies
The policyholder pays the same premium every month and the insurance company invests the money. On death, the insurer pays out the sum assured plus any profits that might have accrued from the investment.
· Low cost whole life policies
A kid of hybrid of the other two whole of life policies that guarantees the amount payable on death is greater than the basic sum assured plus bonuses or at least the guaranteed sum assured.
Endowment life insurance
Endowments are savings plans that include life protection insurance. They often run alongside interest only mortgages to pay off the amount borrowed at the end of the policy term.
Family income benefit
Rather than paying a lump sum, this life insurance pays a regular monthly amount to your family.
Additional benefits
Many companies offer life insurance with added extras or 'bolt ons' at additional cost, like critical illness cover, terminal illness cover and waiver of premiums. These extras offer more life protection insurance than standard policies, paying out on diagnosis of a serious illness or if the policyholder cannot work due to illness or disability.

David Thomson is Chief Executive of BestDealInsurance an independent specialist broker dedicated to providing their clients with the best deal on their life insurance, critical illness cover and home and motor insurance.