Pros And Cons Of Whole Life Policy

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Whole life policy signifies that the insurer promises to pay the beneficiaries a lump sum of money upon insured’s death as long as the insured pays the premiums. The whole life policy cannot be canceled after the policy has been issued, unless non-payment or fraud occurs. Whole life policy is attractive as the claims are a certainty and hence, the insurer must collect enough premiums to pay them.
There are a number of distinct pros to purchase a whole life policy. The major benefit that whole life policy is over other policies is it provides protection for a man to last a lifetime. Since whole life policy is deemed as a permanent insurance, it guarantees the entire lifetime of the insured. In exchange, premiums must be paid from the insured to the insurer. The amount of coverage will always be the same regardless of insured’s age, health, or how much he drinks and smoke. Besides, as long as the payment is made, the policy will not expire even after a specific number of years. Moreover, the premium also cannot be revoked due to illness or disease. However, in order to keep the policy in force, the insured must pay the insurer premium at a timely fashion. …show more content…

To illustrate, an insured bought a 20-year term policy at the age of 30 and now he is age 50, the term policy comes to the end because it is only a temporary insurance. The insured then can consider to purchase another life insurance policy however the premium will vary and might become higher based on the new rates. In other words, when a term life policy expires, an insured’s life protection is no longer covered. The insured has no choice but to let the policy to expire or opt for another life insurance policy depending on his age and health condition. In short, if the insured does not die within a specified period, there are no proceeds

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