wealthfactsheet-life_insurance-whole

1. Whole Life Insurance
Whole life insurance policy as the name suggests is an insurance plan that is for the whole duration of the life of an individual. Usually it covers the standard 'Death' definition with some companies including 'Total & Permanent Disability' as an addition or being included in the basic Whole Life plan.

Whole Life insurance is for people who are from all walks of life. However this type of life insurance is mostly suitable for the following types of people:

1. People who wants to buy their first insurance policy.
2. For those who wants to provide protection for 'Family Income'.
3. For those who wants to provide 'Legacy' for the family.

Types of Whole Life Insurance:
1. Participating
In a participating policy (also known as a with-profits policy in the Commonwealth), the insurance company shares the excess profits or bonuses with the policyholder. The greater the success of the company's performance, the greater will be the bonuses.

2. Non-Participating
All values related to the policy (death benefits, cash surrender values, premiums) are usually determined at policy issue, for the life of the contract, and usually 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.

3. Mutual Life/Investment Linked
This type of policy does not participate in the profits of the insurance company, but rather the variable component (investment portion) would have to be determined by performance of the fund itself.

4. Universal Life
Universal life insurance offers a fixed interest rate and guarantees that your life insurance coverage will be around as long as you will be, as long as premiums are paid.

With universal life insurance, you can provide a permanent death benefit to those who depend on you while earning cash value. Benefits of universal life insurance include a fixed interest rate and a guarantee that your life insurance coverage will be around as long as you will be – as long as premiums are paid.

A universal life insurance policy has the flexibility to adjust to your changing needs. It's more transparent than other types of life policy because you can watch your account value increase as it earns interest and decrease when charges are deducted. Your policy's cash value earns interest based on the company's current interest rate. You can access your cash value almost anytime.
Basically, universal life insurance puts you more in charge of making the decisions that are right for you, and you take on the investment and mortality risks.

As your personal situations change (i.e. marriage, birth of a child or job promotion), so will your life insurance needs. Universal life provides you the flexibility to increase coverage, premiums or reduce coverage or premiums to suit your situation anytime.