Whole life insurance is permanent life insurance. The whole life policy has a continuous level premium that is paid all the way to age 100. The policy is a combination of decreasing term insurance and an increasing cash value. The face amount and the cash value endow at age 100. That means that the cash value is equal to the face amount at age 100. A 10,000 whole life policy will become 10,000 in cash at age 100. The cash value actually replaces the decreasing term insurance when the policy ends.

Limited Premium Whole Life is very similar to the continuous premium whole life policy because it also provides a level death benefit. The premium payments are made over a specific period of time. The 20 pay life has a 20 year payment period. You are insured for life once the 20 year payment period is completed. The premiums are higher than the continuous premium whole life policy because you the policy becomes paid up for life after the payment period. Life paid up at 65 is another example of a limited payment life policy.

Two Types of Whole Life Insurance Policies

Non-Participating This type of whole life insurance does not pay any dividends. Non-participating life insurance is issued by stock companies. Most stock companies issue limited pay life policies as well as the traditional continuous premium whole life.

Participating This type of whole life insurance also has dividends that can be used to accumulate cash or additional paid up insurance. Participating whole life insurance is sold by Mutual companies.

Policy Features of Whole Life

1. Face Amount Amount of Coverage purchased.

2. Waiver of Premium This feature pays the premium on the life insurance if the insured becomes disabled because of injury or illness.

3. Accidental Death rider that pays two or three times the face amount if the insured dies as the result of an accident.

4. Term Riders Decreasing term and level term riders can also be added for short term needs.