Whole of Life Insurance
Protect your family for life
What is whole of life insurance?
Whole life insurance is the original form of life insurance and can be treated as permanent life insurance which provides coverage at fixed rate for the lifetime of an individual. Whole life insurance is primarily used to provide financial coverage in case of debt, family member’s care, college education of the children, marriage of children and funeral costs.
Annual Renewable Insurance:
This type of whole life insurance is automatically renewed each year for a specific period which is generally to 65 years of age or higher. The rate of insurance also goes up with your age since your chance of dying also increases. As a general rule, the younger you are when you take the cover, the lower premium rate.
This is the modified form of annual renewable term with an extended life. After the expiry of your insurance term, which is generally 5 to 20 years, your policy gets automatically renewed. The ability to renew whole life insurance is a prominent feature since 5 to 20 years is a long period and your health can change significantly. Due to the higher risk factor, this type of insurance costs relatively higher than the other type and because of increasing risk on every premium, your cost will almost definitely go up each time you renew.
Level Premium Insurance:
Level premium term insurance ensures your premium rate remain the same each year for the entire term of your policy, which is generally 5 to 20 years. The premium is calculated on the basis of an approximate average of what you would have paid in an annual policy. As a result of this, your premium will usually be higher in the early period of the term and lesser in the later period as compared to an annual policy. The longer this type of policy is held, the more economical it could be. However, if you happen to cancel this policy in the early days after paying off the expensive part of your premium it could prove less beneficial.
In this type of Whole Life Insurance, your premium remains the same; however the cash benefit that you can avail from this policy decreases over the term. It can be used to insure decreasing liabilities such as a repayment mortgage.
Convertible term insurance allows you to convert your whole life insurance into any other form of insurance policy being offered by the issuing insurance company. Your insurance needs change quite frequently, which may often be the case, you can select convertible term insurance. However it may cost you more since it involves a higher amount of risk for the insurance company.