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Whole Life Insurance

Whole life insurance (also known as ordinary life or lifetime policies) provides permanent coverage for individuals during their entire lifetime and is based on the age, health, and the amount of insurance that is requested when the policy is written.

The premiums do not increase as the individual gets older because the cost of protection is distributed evenly during the period that the premiums are paid.

The premium for an individual is actually more than the cost of protection during the early years of the policy and less than the cost as the insured gets older.

This is implimented to keep the actual cost of the policy level by building up a policy reserve for protection in the later years.

Premiums are either set for a specific number of years or are required to be paid throughout the policy holders lifetime. Payments may be paid monthly, quarterly, or annually.

Straight line insurance premiums are paid until the insured's death.

Limited payment premiums are paid for a certain number of years or to a certain age but the insured is still covered until his death.

Because of the reserves and the interest it earns during the life of the policy, the insured may use the excess money for certain situations such as keeping the policy in force for a certain period of time if he decides not to continue to make the premiums.

The policy holder may elect to use the policy as security and borrow money from the insurance company or turn the policy in for it's cash surrender value.

A whole life policy may offer other benefits.

A whole life policy may double the face amount of the insurance if death results from an accident. This is called double indemnity or accidental death.

It may also offer disability insurance if the insured becomes permanently disabled and future premiums may be waived, yet, the policy remains in force.

Whole life insurance provides permanent protection and when the policy holder dies, the benefits are paid to the beneficiary.



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