Whole life insurance is an insurance policy whose term is the rest of the life of the person insured. A whole life insurance policy is one can keep for as long as you live and that will pay the face amount to your beneficiaries. It is more advantageous than a term life insurance policy if you are seeking long term protection. Term life insurance protects you only for a specified period of time whereas whole life insurance protects you for your whole life. It is more costly than term life insurance. The premium in case of a whole life insurance policy will vary according to the type of the policy.
Premiums are the payments you make to the insurance company in order to keep your life insurance police alive. If you fail to pay the premium, your policy will lapse and your beneficiaries will not get the death benefits, thereby defeating the very purpose of life insurance. All whole life insurance policies require the insured to pay premiums, albeit differently for different types of policies.
In participating and non-participating whole life insurance policies, the premium amount is set at the beginning of the policy and remains the same throughout the life of the policy. The premium cannot be changed. In economic whole life policy, the dividends are used to purchase additional term life insurance. This variation of whole life insurance is a mix of term life insurance and participating life insurance. If the dividends are below the estimations, then the death benefit decreases for that year. You can also get a whole life insurance policy with indeterminate premium. The premium will vary from year to year. It is more like a non-participating whole life insurance but here the premium changes to meet the current market conditions. In a limited pay whole life insurance, the premiums are only due for a set number of years. The number of years is determined when you buy the policy. It is similar to a participating whole life insurance policy but once the set numbers of years have gone by, you still have whole life insurance but no premiums to pay. You also have the option of paying the premiums upfront as one large payment with a single premium whole life insurance policy. No other premiums are due and you retain the life insurance policy. The premium for an interest sensitive whole life insurance can vary with the market conditions, similar to universal life insurance policies.
