Life insurance is meant to look after a family against the monetary problems that accompany the untimely death of an employed person. Would your death pose such a difficulty? If so, you have two choices: term life as well as whole life. You compensate a monthly premium with both. A term life plan will compensate a death benefit in the event that you pass away in the particular time, or period, covered by the plan. It has a start and a finish date. If you pass away the day after the policy ends, the insurance company does not compensate a death benefit. The premiums that you compensate for this policy will be gone when the time is up.
Whole life insurance policy is just like term policy. This is a term plan with a limitless period. As the name recommends, a whole life plan is a cover against death, where the amount assured is owed only on passing away, at whatever time it may happen.
In this plan, the policyholder compensates regular premiums till his death (till a claim arises), after which the payment is made to the applicant or the claimant. Even though, in the case of Whole Life plans, the amount assured is owed only on death, several insurance companies pay the amount assured, when the life insured reaches a specific age. Previously various companies used to make this payment at the age of hundred years and lately several have dropped it down to seventy five years.
Premium is usually compensated till the amount assured turns out to be payable, however several insurers offer a choice to pay premiums for a restricted period. Such plans would be named as Limited payment policies. People who are uncertain of the regularity of their earnings and anticipate it to stop or drop considerably over a period of time might select limited payment plans. This is a lot in the case of the professionals like sports stars, accomplished performers as well as armed forces personnel. Several times, a person has or gets a lump sum amount from someplace and is not certain whether he can pay the similar sum each year. For such customers, there is a choice to pay the premium merely one time. Such a plan where the premium is to be compensated only for 1 year at the start of the plan is termed as a single premium plan.
The premium for a whole life insurance plan would certainly be higher than a pure term insurance policy and not like a term plan where the cover is for a particular period, a whole life insurance plan doesn’t attach a plan term and is legal till the passing away of the policy holder, at whatever time it might happen.