Advantages of Whole Life Insurance

There are many advantages of whole life insurance, even more so than term insurance, and it has now become a much sought after insurance plan. There are many different kinds of whole insurance, however, there are 3 main types that you should know about.

Non-Participating or “Non-Par”

This policy is a little like term policy, in the fact that there is a preset amount paid out at time of death. This is actually not a norm when it comes to whole life insurance, as it usually pays out depending on how much was paid in.

However, with non-par, as it is called, you set an amount based on what the broker thinks you are worth, and how long you will live. This is both good and bad, if you die early, they will still pay out the policy, and have to cover the rest themselves. But if you die after they think you would, they retain the extra, as you are still paying into the policy until your death.

Participating (“Par”)

This is the exact opposite of non-par. With this type of policy, if you die after the preset period, then all the “over” charged premiums will be returned upon death, all tax free to boot. They also call this profit sharing, or a dividend. It makes sense really, considering insurance companies are a lot like investment firms

Indeterminate Premium

Very close to a non-par policy, besides the fact that the premium rate is not set, and may vary from year to year, yet never exceeded the amount laid out in the policy contract. This can be good, as there may be times when payments are lower than normal, but can still turn around and be high as well. But, it does have a ceiling, which is good, otherwise, they might really gouge you.