But the fact is, life insurance is much more complex than just A or B, just term or whole. In fact, there are 6 basic kinds of whole life on the market today:
1. Non-Participating Whole Life
This is the most basic, least complex kind of whole life. It does not “participate” in interest-bearing investments and the like, thus, it does not produce any dividends. But, that makes it safer, at least.
And all the features of your policy, like premiums, are fixed for the life of the policy. And the premiums are also generally lower with this type of whole life than with any of the others.
2. Participating Whole Life
With participating policies, premiums also are usually set for the duration of the policy. But these policies “participate” in interest-bearing investments and sometimes, at least, yield dividends.
Dividends can be received in cash payments, as a premium discount, or to help buy extra coverage. The cost of participating policies is more than their non-participating counterparts, but the potential to earn dividends can close that gap or even better than close it.
3. Adjustable Premiums
With some whole life policies, the insurance company doesn’t lay down a set premium but ties the premium to specific economic conditions and investment variables.
There’s a set maximum premium that the company can’t ever charge beyond, however, so it’s not as if you have no idea at all what the premium’s going to be.
4. Economical Whole Life
If you were interested in getting both whole and term life, a more “economical” alternative may exist. This type of policy uses the dividends from a participating whole life policy to buy extra term life coverage.
Of course, it depends on whether you’re getting any dividends at present and how much, as to when, whether, and how much term life cover you’ll have.
5. Limited Payment Whole Life
This type of whole life costs more than other types but offers the benefit of having only a “limited payment period”.
Regular whole life simply continues to require payments until the policy holder passes away, but limited payment whole life lasts for 10, 15, or 20 years – however much the policy specifies.
6. Single Premium Whole Life
Single premium whole life is like limited payment but simply involves paying the entire required premium amount upfront in a single, gigantic payment.
If you can afford it, it will save you money and get your benefit already set far ahead of time. But if you try to cash in early, there could be some additional fees.
As you can see, whole life is not just one monolithic category. If you are interested in whole life, contact Flagler County (FL) Insurance Agency today for some helpful advice on deciding on which specific policy type is right for you!