Whole life insurance also known as ordinary life insurance policy continues to insure an individual for his whole life. There is only one condition that the premiums must be paid on time and until the maturity date of the policy. Many individuals question the reason for the increased premium price of the whole life insurance compared to the ordinary life insurance. The reason for the increase is due to the long term coverage – till the time the premium is paid. These premiums are usually decided as per the insured’s age. It is then fixed throughout his life term. There are also some life insurance policies that are for limited terms such as 10, 20 or 65 years.
The death benefit is usually defined during the enrollment of the policy. A death policy generally matures at the age of 100 or at the death of the individual. In that case, they receive the face value of the policy. In recent policies post the year 2009, the whole life insurance policies have increased the life term from 100 to 120. In case of any outstanding loan amount that has not been paid in full at the time of subject’s death, the subject receives the amount after deducting the remaining loan amount from the actual face value of the policy.
If you are seeking a life insurance of a term greater than fifteen years, then whole life term is recommended. Besides its long term benefit, the policy also has tax benefits. There are however some benefits which must be considered before enrolling into the policy: inflexibility of the premiums, rate of return is usually not competitive.
In case of whole life policies that offer dividend, you may be able to increase your overall face value of the policy by reinvesting them. Bear in mind that not all policies extend dividends. You may opt in for smaller premiums to be paid for a specific time period and later increase the amount of premium. You also have the option to purchase a Survivorship life insurance in which two individuals are insured under the policy. The policy is matured at the death of the second holder.
For any individual or group health insurance Virginia, contact SMH Insurance.