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Whole Life Insurance can come across as a very complex product to
some but if broken down in an easy to understand way from a good educator it can be made very simple to understand. Whole Life Insurance is a life insurance protection that will cover you for your whole life guaranteed. What most love about whole life insurance is that it takes the guessing out of the product and minimizes or better yet eliminates any risk or speculation? You have a guaranteed monthly premium, a guaranteed paid up value, a guaranteed cash value, and in many cases a guaranteed pay period.
Types of Whole Life Insurance
Non Participating Whole Life Insurance
Is a permanent insurance where the premiums remain level for a designated pay period guaranteed. The cash value is guaranteed, and the paid up value is also guaranteed. But the death benefit does not change it always stays the same.This type of insurance can be set up as a limited pay option, which means you can pay for 10, 15 or 20 years and stop paying but continue to keep your coverage for life. There is a cash value which serves as kind of a safety net, so in the event you run into a dire or straight situation you can recoup some or all of the cash you put into the policy depending on which year you cancel.
In most cases the cash value usually starts at year 10. Most insurance advisors would dissuade you from cancelling as you would lose your coverage for a small cash value versus the death benefit that is significantly larger. You also have a paid up value which serves as a safety net in the event you needed to stop paying, so you could stop paying your premiums in year 10 and keep half of your coverage for life without paying anything further.
Participating Life Insurance
Participating life insurance can combine permanent life insurance
protection with a tax-advantaged savings component. It can provide insurance protection for life, provided premiums are paid when due.
Participating life insurance is flexible permanent life insurance
- A core of guarantees for basic coverage—premium, death benefit and cash surrender values
- A tax-advantaged savings component
- The potential for earning policyholder dividends that can be used to purchase additional life insurance or reduce your out-of-pocket premiums (policyholder dividends aren’t guaranteed)
- A choice of riders and benefits that can be added to the basic policy
- Premium flexibility
Participating life insurance policies have the potential forbearning policyholder dividends.
In Canada, the opportunity to earn policyholder dividends isbunique to participating life insurance policies. Participating policyholders share in the experience of the pool of participating life insurance policies through the payment of policyholder dividends.