Whole Life & Term-100 Insurance

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Difference between Term and Perm Life Insurance

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Term insurance can become expensive, premiums for perm insurance typically remain level but tend to be higher in the early years of the policy.

The excessive amount paid for a permanent policy is used to build up a reserve to help fund higher cost of insurance later in life

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Whole Life - overview

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Whole Life Insurance typically guarantees premiums, death benefit and cash surrender value (CSV) for the policy.

Provides coverage over whole life of the life insured, does not expire, doesn’t require renewal, can’t be cancelled by insurer except for non-payment of premiums.

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Policy Reserves

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Premiums remain level over time & exceed the amount needed to pay death benefit in early years. “Overpayment” creates a policy reserve which insurer invests to achieve more growth. In later years reserve is used to subsidize amount needed to cover mortality costs and expenses of policy.

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Term-100 (T-100)

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Provides LI for entire lifetime of the Life Insures but the policy matures @ age 100 and premiums are no longer payable. T-100 policies typically don’t have a CSV.

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Universal Life (UL)

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Provides coverage for the entire lifetime of the life insured but also includes savings component - created through deposit of excess premiums. Within certain limits, UL policy can be used to accumulate savings that are tax shelters if they form part of the death benefit or tax-deferred if withdrawn prior to death. UL policies are known for flexibility