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Premiums On Whole Life Insurance

By Compuquotes Team on March 27th, 2008

There are seven typical types of whole life insurance that you can choose from. While every insurance company doesn't necessarily offer all of the different types of whole life insurance, there is one thing that all whole life insurance policies have in common-premiums.

Premiums are the payments that you make to the insurance company in order to maintain and obtain your insurance policy. Failure to make your premium payment to the insurance company can result in termination of the policy. In most cases, if the policy is terminated for failure to pay premiums, you get nothing in return, which is why paying your premiums on time every time is of paramount importance.

With non-participating and participating whole life insurance policies, the premium amount is set at the beginning of the policy. The premium will stay the same throughout the life of the policy and can't be changed. With non-participating, if the premium is either too high or too low, the insurance company bears the brunt (excess payments) or the best (keeps the excess). With participating life insurance, the insurance company and the insured share the excess.

Economic whole life insurance is a blend of term life insurance and participating life insurance. The excess in premiums paid (dividends) is used to purchase additional term life insurance. However if the dividends are below the estimations, then the death benefit decreases for that year.

Indeterminate premium means that the premium on your whole life insurance policy will vary from year to year. This is similar to non-participating whole life insurance, except that the premium changes to meet the current market conditions.

Limited pay whole life insurance is similar to a participating whole life insurance policy but instead of having premiums to pay for the rest of your life, the premiums are only due for a set amount of years, for example 20 years of premiums. After the time has elapsed, you still have whole life insurance but no premiums to pay.

A single premium whole life insurance policy is where the premiums are one large payment up front, which is a form of limited pay. However after the lump sum payment, no other premiums are due and you retain the life insurance policy.

Interest sensitive whole life insurance premiums can vary with the market conditions, similar to universal life insurance policies. The interest on the policy's total cash value changes with the market conditions and the premiums are adjusted in a similar fashion.

All whole life insurance policies require the insured to pay premiums, albeit differently for different types of policies. If the insured makes a large premium payment at the outset of the life insurance policy, then he can do so again in the future. However, if the insured doesn't make a large premium payment, he will likely not be allowed to do any of the sorts in the future of the policy.

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