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Whole life is the most common type of permanent life insurance that can cover the policyholder over the course of their entire life as long as premium are paid by owner of the policy or policy itself.
Whole life insurance have below characteristics
1. Participating
The policy owner shares with the insurer in some of the risks and rewards associated with the expenses and mortality gains/losses associated with life insurance underwriting. Participating policies entitle the policy owner to a return on investment in the form of dividends.
2. Non-Participating
The policy owner do not share in any of these variables:
a)All of the premiums, benefits, and
b) Values associated with the policy are fixed and guaranteed at the time of policy issue.
3. Interest rate sensitive policies
In interest rate sensitive policies, premium rates are based on estimates or assumptions, respecting future claims, investment earnings, and operating expenses. Since premiums and benefits for traditional whole life products are guaranteed throughout the term of the contract, estimates of future investment earnings must, of necessity, be conservative.
4. Adjustable premium whole life
In Adjustable premium whole life, the sum insured and the premiums are guaranteed for a limited period. At the end of that period, investment yields are higher than those prevailing, when the contract was made, one of two things happens: Either
a) The sum insured will be increased without increasing the premium, or
b) The sum insured will be maintained and the premium will be reduced, to reflect the higher interest rate applied.
Conversely, if investment yields are lower than anticipated, then the sum insured will be decreased on the same basis, but the policy owner will usually have the option of paying a higher premium, in order to restore the sum insured to its previous level.
I hope this information will help. If you need more information, you can read the complete series of the above subject at my home page:
http://lifeanddisabitityinsuranceunderwriter.blogspot.com/
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