Maryland Whole Life Insurance

Whole Life insurance provides coverage for your entire life, provided you continue to pay the premiums. Premiums generally remain level for the life of the contract. In addition, the policy also accumulates cash value that can be used to help supplement future financial needs.

The main benefit of Whole Life insurance is that a payout is guaranteed, as a result the premium you pay are substantially higher than that of a term policy of the same face amount or death benefit. While it is said that Whole Life Insurance provides coverage for your entire life, it is very important to note that there is a termination date built into the policy. That termination date is age 100.

Let's take a look at this example. A female purchases a $100,000 whole life policy at age 50. That means she is going to be insured under that policy for 50 years because, whole life policies terminates at age 100.

If she dies during the 50 year period she was insured, a death benefit of $100,000 is paid to her beneficiaries. On the other hand, if she lives to be 100 years old, she will receive $100,000 in cash value and the policy terminates.

If for any reason, she decides to terminate the policy before turning 100, she will receive the cash value the policy has accumulated up to that point. She may also borrow against the cash value in the policy at a reasonable rate without terminating the policy. Whole life insurance policies are generally issued two ways, the type you qualify for will depend on the status of your health.

Level Benefit Whole Life

Death benefit is level from the effective date of the policy. If the insured dies while the policy is active, the full death benefit is paid. There are no waiting periods.

Graded Benefit Whole Life

In a graded death benefit policy, the death benefit is not level. Beneficiaries will be paid a certain percentage of the death benefit if death should occur in year one, a larger percentage if death occurs in year two, and so on. By year five, most graded death benefits have reached a level death benefit. Graded benefit premiums are also higher than those of standard of level benefit whole life.

Types of Whole Life Insurance

Non-participating Whole Life Insurance

This is the most popular type of whole life insurance policy. People like it because of its simplicity. The premium remains the same over the lifetime of the policy and the payout at the end is stated clearly in the policy. The disadvantage of this type of whole life insurance is that it pays no dividends.

Participating Whole Life Insurance

The disadvantage of non-participating whole life is the advantage to participating whole life insurance, which pays dividends. The dividends are paid because of the favorable investment earnings, expense savings and favorable mortality of the insurance company. Dividends can be paid in cash, used to reduce your premiums, left to accumulate or used to purchase additional paid-up insurance. Dividends are not guaranteed to be paid to you.

Level Premium Whole Life Insurance

Level premium whole life insurance has a monthly, quarterly, or annual premium that never changes. During the course of the insured person's entire life, he or she will pay the same amount. Initially, the premium covers more than the cost of insurance. The excess goes into a fund that accumulates to make up the cash value. Since currency is expected to decrease in value in later years, the same premium maintains the policy, but could possibly be less than would sustain a similar one at that time.

Limited Payment Whole Life Insurance

While the name of this program gives a bad impression, it should not. A limited payment life insurance policy allows a person to pay higher premiums based on a plan set up with his agent to pay premiums up until a certain age. For example a 45-year-old woman wants to buy insurance, but hates the idea of having payments on anything past the age of 65, when she expects to retire. A limited payment policy would be ideal. She will pay higher premiums over 20 years, but none after while still having a lifetime policy to pass on to her spouse, children, grandchildren, or favorite charity.

Single Premium Whole Life Insurance

Of all the types of life insurance, single premium is usually thought of most as a type of investment. With this kind of policy, a person will pay one large premium at the time of issue and not pay any further premiums in the future. As a result, the features of cash value and ability to borrow against the policy are present as soon as the policy starts.

Intermediate Premium Whole Life Insurance

Intermediate premium whole life plans are similar to non-participating plans, but the premium rate varies. As the cost of insurance goes up, so does the premium. A positive side to this kind of policy is that the rate has a cap that should prevent the plan from becoming unreasonably high. Buying life insurance is important for those that have family members dependent on them for financial support. Spouses and children will have a lifetime of heartache living without someone that means so much to them. None of that heartache should have to involve financial worry if it can be prevented.