Understand Whole Life Insurance
Whole life insurance quote. Because whole life insurance is a little more complex than term insurance I recommend that before you get your whole life insurance quote it would be wise to briefly look over how this policy works.
Whole life insurance is known as permanent insurance because you can keep this policy until your death even if this should occur at age 100 or later.
The death benefit is level throughout this time unless increased by dividends. The premiums also remain level unless decreased by dividends. Whole life insurance has cash values. Here is how they work.
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I go into great detail here because this information is included in your policy itself but not in your quote.
- Cash Values
The cash value of a participating life insurance includes the amount of guaranteed cash values included in the table attached to the policy, plus the cash value of any paid up additions purchased by dividends if earned plus any dividend accumulations added to the policy.
The owner of a whole life policy may surrender the policy at any time for it’s cash value.. Any debt incurred by the policy through the lack of premium payments or through unpaid policy loans will be deducted from the cash value of the policy upon it’s surrender. Any outstanding loan is also deducted from the proceeds upon death.
If your whole life policy is a participating policy it will share in the life insurance company’s divisible surplus. The company determines if there is any surplus and how much it will be. This amount is credited to the policy as a dividend on the anniversary of said policy.
The dividend reflects the mortality (how many insured people died) and investment experience of the company. The expense to operate the company is also an important consideration.You should give thought to the fact that dividends are not guaranteed when you examine your whole life insurance quote.
You can use your dividends to purchase, what is commonly referred to as, paid up additions. Paid up additions are tiny single premium life insurance policies that you never have to pay a premium on. These paid up additions also share in any dividend determined by the life insurance company. If all premiums are paid the death benefit is also increased by these paid up additions.
You have the choice of allowing your dividend to be left with the company to accumulate interest. This choice will also increase your death benefit if there is no outstanding debt due to the policy.
This information may not have been included in your whole life insurance illustration but it will be in the policy itself.
Some life insurance companies allow the policy owner to take their dividends in cash. They send you a check at the anniversary of the policy.
Dividends, if you should choose, can be used to reduce premiums. If you elect this option when you get your whole life quote the company will advise you each year how much the premium is. It is never more than you contracted for but, depending on the amount of dividend applied to the policy, it could be less.
The great mistake that too many people make is that they know little or nothing before they get a whole life insurance quote. Too many people buy their policies blindly. You, however, now know something about whole life insurance now. You are ready to get your whole life insurance quote.
You should check out this page for more detail:
Whole Life Insurance Online
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