Types of Whole Life Insurance – Four Options to Choose From
Types of Whole Life Insurance Four Options to Choose From
Whole life insurance is one of the two broad categories of life insurance you have to choose from today. The other option is called term life insurance. If you decide that whole life insurance is right for you, you still have four different types of whole life insurance options to choose between. Here is a look at each one so you can get a better idea of what might be best for you situation.
First, there is an option called traditional whole life insurance. With this kind of policy, the amount you pay as your monthly premium is fixed. It can provide your family with permanent financial protection without needing to be renewed or converted. A cash value will begin to accumulate as your make your payments so you can borrow against your policy. This growing amount of money is tax deferred. If you were not to touch this money until you turned 100 years old, it would then be worth the face value of your policy.
Next is universal life insurance. Also known as a flexible premium policy, this option allows you to determine how much and how frequently you pay your premium. The policy face value is adjusted to meet your changing needs. A new policy does not need to be issued even as you make these changes. The cash value can also be withdrawn with this option.
There is also variable life insurance. The protection provided by life insurance and the growth potential offered by stocks are combined with this option. The benefits that accumulate, and which are payable upon the death of the insurance policy holder, vary based on securities found in the portfolio of the insured. However, the fees you pay as premiums remain fixed. To limit your investment risk, you are given a minimum death benefit amount and the entire value on top of that can increase or decrease daily.
Finally, a combination of all these policies is called a variable universal life insurance policy. It has another name as well, which is flexible premium universal life insurance. The features combine a flexible premium, control of cash value, and flexible death benefits all in one. You pay an established premium based on your initial death benefit request, and then you can pay whatever amount you wish as long as it is sufficient to cover the face value you wish for. Then any cash value associated with the account is invested in separate accounts.
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