Whole Life Insurance Premiums

Whole life insurance plans are permanent life insurance coverage for as long as the insured person lives and continues to make timely premium payments. These policies generally offer fixed premiums, guaranteed death benefits and are designed to build tax deferred cash value. For this reason, whole life insurance policies are described as providing life insurance protection along with a savings feature.

Once the policy is taken, whole life insurance premiums are guaranteed for life. The monthly premiums in this type of policy are usually significantly higher than term life premiums. But the benefit is that the rate will not increase later in life and the insured will not have to re-qualify at some point. Whole life insurance policies build cash value because the additional money paid in monthly premiums is invested and grows over the years of the policy. The insured can borrow against its value, or even sell the policy later in life.

There are many types of whole life insurance premium policies and the insurance applicant has the option to choose one that suits him and comes up with maximum security for his family. One of these kinds is the non participating whole life insurance policies where the premium remains the same over the lifetime of the policy and the payout at the end is stated clearly while another kind known as participating whole life policies are those that also pay dividends. Another kind is the level premium plans in which the insured has to pay a monthly, quarterly, or annual premium that never changes while limited payment whole life insurance plans need premiums to be paid only till a certain age. Single premium whole life insurance plans are a form of limited pay, where the pay period is a single large payment up front and is generally taken for investment purposes.

The premiums for whole life insurance policies are calculated based upon several factors like age, lifestyle and medical history of the insurance applicant and the family. Life insurance companies avoid insuring or charge higher rates for people who statistically, because of medical conditions or riskier behavior have great risk of a premature life loss.

There is another category of life insurance called universal life insurance. These plans provide additional flexibility as they break the death benefit and accumulation of cash value into separate components. This allows the policy holder to make changes in the policy, for example, if the policyholder wants to increase the death benefit, he can put more of the premium money into the insurance account and less into the cash value account. Also, the policyholder can decrease the death benefit and increase the cash value contribution. Using the cash component, the insured person can also temporarily stop making premium payments as long as the cash value can cover the cost of insurance.

Most life insurance applicants decide their insurance coverage upon the price they can afford, rather than what they actually need. One actually should go for a whole life insurance plan according to the coverage he needs. For example, one can determine how much coverage one requires, and this is done by estimating the amount of one"s income and multiplying it until one feels that it will offer sufficient protection for his family. Say, if one"s annual income is $40,000, one may want to insure that his family has three years of covered finances so he would want $120,000 in insurance.