Whole life Insurance
What is a person to do to unravel this mystery of the life insurance forms? Well, here's a unique perspective - Why don't you enlist the help of some people you trust to advise you? How about an accountant, an attorney and an insurance professional? If you would like to meet and discuss how life insurance can play a vital role in the financial success of your family or your business, e-mail me! R. W. Thomas, Jr.
Whole life insurance was a simple concept as well... It was assumed that you would die at age 100. After you decided how much protection you needed, the company would look first at the facts above (age, etc.) and then at the interest rate that could be applied to funds held in the policy. Over and above the term cost per year, the company would add an amount of money needed each year so that, after interest is paid on the accumulated money, the death benefit would be the value of the fund (cash value) at age 100. You pay a level premium, overpaying the term rate in the early years, to accumulate a fund that can be used to pay a portion of the higher premium in your later years.
Recently, a phenomenon referred to as "level term" has entered the marketplace. You will notice advertisements for 10-year; 15-year, 20-year and even 30-year "level term" insurance. The idea is that your premium will remain level over the given period. If you understand the discussion of term insurance above, you realize that there must be some overpayment of the term level in the early years. Here's a question - if the policy is cancelled in the first few years, who keeps the overpayment? Answer - NOT YOU!