The whole Life Insurance is a form of permanent insurance policy. It provides just what its name implies, insurance coverage for the entire life of the insured.
This means to say that as long as the premiums are paid, the coverage continues until the insured dies or reaches some predetermined advanced age (usually 100 years old).
The expression of “Whole Life” insurance has no reference to the period in which the premiums are paid, only to the duration of the protection, i.e. protection for whole of life.
The limited payment policy is designed for people who desire to have the lifetime protection offered by a Whole Life policy but who do not like the idea of paying premiums for their entire lives. Under this policy, the insured can pay the premiums for a specified number of years (i.e 8 or 15 years) or up to a specified age (e.g. age 55). The insurance cover will continue for the rest of the insureds life.
Features/ Benefits of Limited Payment Whole Life Insurance
1) It is a whole life insurance policy that provides lifetime insurance protection with a limited premium payment term (e.g 8 or 15 years). So that people worry of the affordability in their old age.
2) Though Whole Life insurance emphasizes protection, it also has some type of savings element in addition to the death benefit. This savings element is known as “cash value”, meaning that the insured can cash out the Whole Life policy by surrendering it after a specified period of time (usually after 3 years);
3) A total and permanent disability benefit is usually attached to a Whole Life policy as part of its basic benefit. All types of riders are usually allowed to be attached to the policy;
4) Policy loans are allowed once the policy acquires a cash value. This feature enables the insured in temporary need of cash to borrow against the policy’s cash value. Interest will be charged on the loan;
5) Upon death, the death benefit is paid in one lump sum; and upon total and permanent disability, the death benefit is paid either in a lump sum (if it is below a specified amount) or in installments, e.g. 10% ¬ 1st year, 10% – 2nd year, 10% – 3rd year ,10% – 4th year and 60% – 5th year.(Note: actual ways of payment are vary for different insurance companies)
Who this is for?
o For those seeking basic lifetime insurance cover and savings
o A Whole Life product with Regular Premium payment for a limited period.
Word of Caution from Kerry, founder of InsuranceUniversity.com.sg
– As the premium is only payable for a specific period of time, therefore, the premium is higher than Straight Life Insurance.
– Buying a life insurance policy is a long term commitment. An early termination of the policy usually involves high costs and surrender value payable may be less than the total premiums paid.
– If the insured commits suicide within one year of purchasing the policy, no claim can be made and the insurance company will only return back the premium paid without interest,
– Any disability or terminal illness caused directly or indirectly by any of the following occurrences, no claim can be made on the Total & Permanent Disability Benefit:
(a) Self-destruction or any attempted threat while sane or insane;
(b) Military or naval service in time of declared or undeclared war;
(c) Entering, operating, or servicing, riding in or on, ascending or descending from or with any aerial device or conveyance except while the Insured is in an aircraft operated by a commercial passenger airline on a regular scheduled passenger trip over its established passenger route or by the Republic of Singapore Air Force.