Whole Life Insurance - Protect yourself for life

The level of payout can vary from a fixed sum to one that is wholly dependent on investment performance on what remains after mortality costs and other expenses are deducted. The level of premium payable may be a single, fixed periodic (e.g. monthly), or a periodic payment that may be reviewed subject to the underlying investment performance and sometimes changes in mortality cost.

Some policies will permit a range of flexibility allowing the maximizing of potential payout over a set period (such as ten years). Once this period is over and the insured individual or individuals are older the cover can be continued for an increased premium or the cover reduced (or somewhere in between limits). At any time the target benefit can be set for life. These policies are useful, for example, to those who want increased cover while they have dependent children and then want to reduce cover to last their life. An advantage of this over choosing a term policy and waiting until later to replace it with a

Whole Life contract is that the individual is underwritten for life and are not restricted or prevented in future cover should they ever have a serious illness such as cancer.
There are several types of whole life policies. New York State defines six traditional forms: non-participating (or "non par"), participating, indeterminate premium, economic, limited pay, and single premium. A newer type is known generally as interest sensitive whole life. Other jurisdictions, may classify them differently, and not all companies offer all types.

In non-participating, all values related to the policy (death benefits, cash surrender values, premiums) are determined at policy issue, for the life of the contract, and cannot be altered after issue.

In a participating policy (also par in the USA, but known as a with-profits policy in the Commonwealth), the insurance company shares the excess profits (dividends in the USA, bonus in the Commonwealth) with the policyholder. The greater the success of the company's performance, the greater the dividend. For a mutual life insurance company, participation also implies a degree of ownership

Indeterminate is similar to non-participating, except that the premium may vary year to year. However, the premium will never exceed the maximum premium guaranteed in the policy.

Economic is a blending of participating and term life insurance, wherein a portion of the dividends is used to purchase additional term insurance. This can generally yield a higher death benefit, at a cost to long term cash value. In some policy years the dividends may be below projections, causing the death benefit in those years to decrease.

Whole life insurance is not limited to a specific period like term insurance. Premiums are usually more expensive because it is certain that the insurance company will eventually pay the sum insured. With some policies you will have to pay the premiums until you die, but with others you may not have to pay premiums any more once you reach a chosen age - say 65 or 80 - but the insurer will pay the sum insured when you die. In these cases the policy is then known as "paid up". Whole life insurance can be arranged with or without profits or can be unit-linked.

Group Insurance Scheme is life insurance protection to groups of people. This scheme is ideal for employers, associations, societies etc. and allows you to enjoy group benefits at really low costs.

Universal Life is a type of permanent life insurance based on a cash value. That is, the policy is established with the insurer where premium payments above the cost of insurance are credited to the cash value. The cash value is credited each month with interest, and the policy is debited each month by a cost of insurance (COI) charge, which is drawn from the cash value if no premium payment is made that month.