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Whole life insurance provides coverage to the insured person for the duration of life. Upon the death of the insured person, whole life insurance will pay a lump sum and guaranteed death benefits. The payout of a whole life insurance policy may be a fixed amount or an amount deducted from mortality costs and other expenses. Whole life insurance also accumulates cash value. The cash value is a return on a percentage of the paid premiums that are invested by insurance organizations. The cash value is tax-deferred until it is withdrawn and the insured person can borrow against it. Mutual insurance companies also issue participating policies that enable the insured person to earn dividends. Dividends are non-guaranteed returns of a percentage of the premium based on the performance of insurance organizations.

Whole life insurance quotes have six main types: non-participating, participating, indeterminate premium, economic, single premium and limited payment. In non-participating quotes, all values that are covered, including death benefits and premiums, are fixed once the policy is issued and cannot be changed. For this, insurance companies pay the difference for underestimated claims. However, if the claims are overestimated by the actuaries, the insurance companies keep the difference.

In participating whole life insurance, dividends are paid to the insured person. Dividends reflect the good performance of the company and are the products of surplus earnings from investments, advantageous mortality rates and expense savings. They may be paid in cash or used to lessen premium payments. Dividends may also be accumulated at specific interest rates or used to buy extra insurance to increase the coverage amount.

An indeterminate premium policy has changeable premiums. The insurance company charges a current premium depending on the latest data of investment earnings, mortality and expense costs. The company will adjust the premiums based on these data, but the premium will never exceed the maximum guaranteed amount.

Economic whole life insurance is a combination of term life insurance and participating whole life insurance. In this, a percentage of the dividends is used to buy additional term insurance. This may increase the death benefits at the cost of a lower cash value in the long run.

The single premium is a limited payment whole life insurance plan that has a comparatively large premium paid upon issue. As a result, the insured person does not pay any further premiums. This policy has immediate cash and loan value depending on the amount of the single premium payment.

Limited payment whole life insurance is almost similar to a participating policy. The difference is in the limited payment type, yearly premiums are not paid for life, but only for a specific number of years. The policy can also be fully paid at a specific age like 60 or 70. The premium payments will be less cheap than other whole life insurances because the premiums are paid over a shorter time frame.

Whole life insurance is a viable option for those who looking to provide for loved ones after death. As with most other insurances, whole life insurance provides a needed cushion should anything happen.


Sources:
"Whole Life Insurance." Wikipedia. 16 Nov. 2007. http://en.wikipedia.org/wiki/Whole_life_insurance.

"Whole Life Insurance." Life Insurance. 16 Nov. 2007. http://www.lifeinsurance.net/about-whole-life-insu rance.htm.

"Whole Life Insurance Choices." Personal Insure. 16 Nov. 2007. http://personalinsure.about.com/cs/lifeinsurance/a /aa012003a.htm.

"Whole Life Insurance - Top Ten Questions." New York State. 16 Nov. 2007. http://www.ins.state.ny.us/que_top10/que_life_who. htm.