Whole Life Insurance
Whole life insurance is a type of policy which covers you for your entire life from the moment you buy the policy for as long as you pay the agreed premium. Unlike term life which only pays out death benefits if you pass on within the specified term of the policy, a whole life insurance policy’s death benefit is guaranteed regardless of when you pass on. Apart from the guaranteed death benefits, the most interesting feature of this policy is that it builds cash value over time.
Whole life insurance policies can be categorized into two different types which are:
Balanced or standard coverage means that your premium rate stays the same throughout the policy term irrespective of your health status. Also, it also has a fixed amount as a death benefit to be paid out to your beneficiaries when you pass on.
Maximum coverage means your premium payment is put in an investment fund by your insurer. The idea behind this is that, over time, the returns generated from the investment will be enough to cover the agreed amount for payout. The investment option gets reassessed periodically, and if its performance is below the expectation, your insurer may re-adjust the policy. However, the readjustment may lead to a higher premium rate or reduction in the eventual payout of the policy.
Family Income Benefit Life Insurance
Family income benefit life insurance is a special kind of policy which is specifically bought to secure the future of one’s loved ones. You agree with your insurer on how long you would want the coverage to be in force and the amount of income you would want for your family for during the coverage period.
This will determine the policy amount you are to pay. If you pass on during the period, your insurer will have to pay a lump sum of the agreed regular income benefits to your beneficiaries for the remaining term of the policy. For example, if you choose a 15-year term coverage and you pass on five years later, your dependents will get a regular income from the company for the remaining 10 years of the policy.