Home  Learning Center Affiliate Programs Legal Privacy Links




Learn About Life Insurance...

Whole Life Insurance

Whole life insurance offers the policyholder a cash value account and tax-deferred cash accumulation and pays a death benefit directly to the named beneficiary. The policy is in effect during the lifetime of the insured and provides permanent security for all your dependents while building a cash value account.

On of the benefits of a whole life policy is that it provides a savings component (cash value), which is tax-deferred. The policyholder can borrow from or cash in the policy during the policyholders lifetime. The policy has a fixed premium, which does not increase during the policyholder's lifetime, as long as the planned premium amount is paid. The premium is invested for the insured for a long-term basis.

A whole life insurance policy does not allow for any premium flexibility. The policyholder cannot invest into separate accounts, such as money markets, stocks and bond funds.

The policy cannot terminate unless the policy holder dies and the beneficiaries are paid benefits, the policy reaches the age of 100 or the policy cancels for nonpayment of premium and the cash value of the policy is returned to the insured.

There are several different types of whole policies. They are as follows:

  • Single premium whole life policy is when the policyholder pays whole life premium in one lump sum. The only benefit to this policy is tax advantages. The regular life policy grows in response to the interest rate and the growth is then tax deferred. If a client wants to shelter some money and would want death benefits, the single premium would be an excellent choice.
  • Continuous premium life (aka straight life) policy is the most common whole life policies. This policy accumulates in cash value and provides lifetime protection with level premium payments up to the age of 100. This policy offer the lowest regular premium cost among the permanent policies.
  • Limited-Pay policies are paid over a limited period of time. Each type of plan is named after the terms of the payment period (i.e., "20-Pay Life," or "Life Paid-up at 65"). The payment amounts are determined according to length of the payment period. In addition, the insurer must pay the full, insured amount to the beneficiary in the event that the policyholder dies, even if the insured has only made one payment to the policy.
  • Current Assumption Whole Life (aka Interest Sensitive Whole Life) premium payments fluctuate according to the current interest rates. The premiums are adjusted upon renewal of the policy.

Term Life Insurance

Term life insurance is the most simplified of the life insurance types. The basic concept for term life is that the policyholder pays a premium for a specified amount of coverage for a limited period of time (aka "term"). If the insured should happen to die before the end of the term, the beneficiary would be paid the face value of the policy. If the insured does not die before the policy period expires, no benefit is paid out.

A term life insurance policy has no cash value and the coverage period is very specific. The premium is intended to cover only the cost of the insurance itself and usually for fairly short period of time.

The premiums are based mainly on the age of the policyholder and with the increase of age there is the more likelihood of death. The most common of the term policies is the one-year policy written with level benefits. These policies renew annually until a certain age (average 65-70) and the premiums fluctuate according to gender and by specific underwriting guidelines. Some medical testing (i.e., blood, urine, saliva, etc.) maybe required at a certain age or under certain medical conditions.

Premiums apt to be more expensive at older ages and most insurance companies offer policies with increments of 5, 10, 15, 20, or 30-year guarantees, with premium levels based on the insured's age at the time the policy was purchased, and on the length of the guaranteed premium level.


There are several different types of term policies. They are as follows:

  • Level Term is a death benefit contract, which remains level throughout the policy term. The premium can increase at confirmed intervals over the years or it may remain the same, but the death benefit will remain the same. This type of term insurance is sold in yearly terms of one, five, ten, twenty, or until the age of 65.
  • Decreasing Term is a death benefit contract, in which levels decrease over time, but premium remains the same throughout the policy period. The most common use for this type of policy is to cover a mortgage. As the mortgage amount decreases of over time, so does the amount of insurance needed. A term life policy is used cover the policyholders financial obligations.
  • Increasing Term is a death benefit contract, in which levels and premium increase over time. This coverage is usually written as a rider to a policy and written for the purpose of providing the policyholder with increasing death benefits until the policy terminates. One reason for obtaining this type of coverage could be that the insured needs his/or hers benefits increased while their children are attending college.
  • Renewable Term is a death benefit, which provides levels throughout the policy period. In addition, this coverage provides for automatic renewal without having to provide proof of insurability. The premium is adjusted according to the age of the policyholder upon renewal of the policy. If the insured experiences ill health/terminal conditions, the insurance company cannot non-renew or cancel the policy. The maximum number of times a policy can be renewed is specified by the insurer.
  • Convertible Term is a death benefit, which provides levels throughout the policy period. In addition, this coverage provides the option to change the policy to a permanent (whole life) policy without having to prove evidence of insurability. An additional premium is required for this special feature. If the insured experiences poor health/terminal conditions, the insurance company cannot non-renew or cancel the policy.
Joint Life Policy (aka First to Die)

A joint life policy is commonly written as a family or business life policy. This policy is written as a whole life or a term contract for a married couple or for business partners.

This particular policy pays out death benefits when the first of either individual listed on the policy dies, and it insures that the remaining individual collects a proper sum of money for the beneficiary's expenses and retirement. In the event that a business partner dies, the surviving partner would collect the benefits in order to buy out the deceased partners interest in the business.

Survivorship Life Policy (aka Second to Die)

A survivorship life policy is considered a specialty type policy in which it is written as a family life policy for two or more individuals, such as a husband and wife. It can be written as a term or whole life policy. The survivorship policy is paid out upon the death of the second person. In the situation of a married couple, the purpose of this policy is to pay estate taxes.



Second to Die

A survivorship life policy (aka Second to Die) is considered a specialty type policy in which it is written as a family life policy for two or more individuals, such as a husband and wife. It can be written as a term or whole life policy. The survivorship policy is paid out upon the death of the second person. In the situation of a married couple, the purpose of this policy is to pay estate taxes.



Universal Life

A universal life policy varies from a whole life policy in the respect that a universal policy's insurance section is separated from the investment section of the policy. This type of policy is referred to as an "unbundled" policy and offers the policyholder a choice of pure protection (pure), cash value buildup (whole life) or a combination of both.

This feature provides flexibility for the policyholder, in which it provides the flexibility to increase or decrease the coverage amounts, and in return this would increase or decrease the premiums.

The insurance company withdraws the basic cost of the policy from the premium and cash value of the policy, which is used to provide costs for taxes, administrative and the minimum for death benefits premium.

The insured is required to pay the minimum premium in order to provide for the basic cost of the policy. Should the policyholder decide to pay more than the minimum due, this policy would then work as a whole life policy.

The target premium is usually adjusted when the interest rates are high, the insurance company would reduce the target rate. If the interest rates have decreased, than the insurance company would raise the target rate.

A universal policy permits the policyholder to make partial withdrawls of cash from the cash value account of the policy.

^ top
Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance
Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance
Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance
Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance Life insurance, Commercial insurance, Business insurance, Group Health insurance, Auto insurance, Health Insurance, Home Insurance, Long Term Care insurance