Many people choose a policy to pay out death benefits to their family, but which policy takes the best care of your loved ones after you’re gone? Are there policies that help you while you’re still living?
Choosing the right policy doesn’t have to be a stressful process. Keep reading to learn more about several types of whole life insurance.
What Is Whole Life Insurance?
Whole life insurance is a permanent policy that covers the duration of your life, starting from when your policy becomes active. Term life insurance is a temporary policy that can end if you no longer need it.
Choosing “whole life” insurance gives you a lifelong policy and asset that can be a financial benefit to you while you’re still living. After your death, these policies also payout to your beneficiaries according to the terms of the policy.
What Are the Types of Whole Life Insurance?
Different types of whole life policies pay dividends and death benefits in different ways. Consider these options when selecting the policy that fits your estate plan best.
Participating Whole Life Insurance
If you want to receive dividends from your policy while still living, a participating policy might be ideal for you. While dividends are never guaranteed, this type of policy allows policyholders to receive payouts while still living—as long as you continue paying the premiums.
You can receive dividends in a few ways, including cash payments, credits to lower premiums, or to purchase paid up additions to your policy.
Non-Participating Whole Life Insurance
If you don’t need the option of dividend payouts, choose a non-participating whole life policy. You’ll benefit from many of the same options that apply to most whole life policies, including borrowing against the policy’s cash value. However, you won’t receive regular dividend payments throughout the lifetime of the policy.
For either of these whole life policies, choose the payment terms that work best for you. These terms include:
- Level premium. Premiums stay the same and payments must continue as long as the policyholder is alive.
- Limited payment. Pay premiums to cover the full policy term within the first ten or twenty years of the policy.
- Single premium. Pay one large premium amount at the start of the policy, then pay nothing else for the duration of the policy.
Beware that these policy types can affect your premium amounts! Do your research and choose the best policy and payments for your budget.
Understand the Types of Whole Life Insurance
Understanding the types of whole life insurance can help you find the best policy to prepare for the end of life expenses and your loved ones. We hope you found this information helpful!
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