Premium Payment Periods For Whole Life Insurance Policies
There are two types of whole life insurance when it comes to payments, and each has a different cost period.
- Standard whole life: Insurers usually refer to these as “life-pay” because you make premium payments for your entire life. Technically, the premiums will stop at either age 100 or 121, at which point no further money would be required. However, only .03% of people in the USA live to be age 100, so effectively you’re going to pay for your entire life. Given that the payments are ongoing, this is the cheapest type of whole life insurance.
- Limited-pay whole life: These only require premiums for a defined period of time. Once you’ve made the necessary number of payments, the policy becomes paid up. At this point, you don’t have to make any subsequent payments, and the policy remains active for the remainder of your life. The most common payment periods are for a number of years, such as 7, 10, or 20. However, some insurers offer policies that become paid up at age 65 or 80. Furthermore, there are single-premium policies that require a single large lump-sum payment, which instantly make the policy paid up. It’s important to know that limited-pay options cost more than standard whole life policies. The shorter the payment period, the higher the cost.
When you buy whole life insurance, you must choose which type you want. If you buy a standard whole life policy, you cannot convert it to a limited-pay plan in the future.
Also, standard whole-life policies are far more common than limited-pay policies.
Participating Whole Life Insurance Policies
Participating whole life insurance is a type of policy that aggressively builds cash value and pays dividends. With these, you could reach a point where the cash value is enough to fully offset your premium requirements.
Now, it’s important to understand that non-participating polices do not operate this way. For non-participating policies, the cash value is not connected to or influences how long you must pay premiums on a whole life policy.
Choosing The Right Type Of Life Insurance
At the end of the day, there are multiple types of life insurance that all work differently, vary in cost, and have unique pros and cons.
It’s vital to choose the type not just on cost. Rather, choose the type that best suits your objectives.
In general, you want to buy permanent life insurance (whole life or universal life) to cover permanent issues such as estate taxes or end-of-life costs.
However, if you’re trying to insure against a temporary problem, such as income replacement or debt coverage, then seek term life insurance.
- Nationally licensed life insurance agent with over 16 years of experience.
- Personal annual production that puts him in the top .001% out of all life insurance agents in the nation.
Anthony Martin is a nationally licensed insurance expert with over 16 years of experience and has personally served over 10,000 clients with their life insurance needs. He frequently authors entrepreneurial and life insurance content for Forbes, Inc.com, Newsweek, Kiplinger, and Entreprenuer.com. Anthony has been consulted as an expert life insurance source for dozens of high-profile websites such as Forbes, Bankrate, Reuters, Fox Business, CNBC, Investopedia, Insurance.com, Yahoo Finance, and many more.
- Nationally licensed life insurance agent with over 20 years of experience
- Best selling Amazon author.
Jeff Root is a nationally licensed life insurance expert with over 20 years of experience. He has personally helped over 3000 clients with their life insurance needs. Jeff is a best-selling Amazon author and the managing partner of a highly successful insurance brokerage that manages over 2,500 licensed insurance agents across the USA. He has been a featured life insurance source for prestigious websites such as Forbes, Bloomberg, MarketWatch, Nerdwallet, and many more.
- Nationally licensed life insurance agent with over 15 years of experience
- Best selling Amazon author of five insurance sales books.
David Duford is a nationally licensed insurance expert with over 15 years of experience. He has personally helped more than 15,000 clients buy life insurance. David has been featured as an expert source for highly authoritative publications such as A.M. Best and Insurancenewsnet. He also runs one of the largest Youtube channels to help aspiring insurance agents serve their clients better.
- Nationally licensed life insurance agent with over 20 years of experience
- Best selling Amazon author.
Jeff Root is a nationally licensed life insurance expert with over 20 years of experience. He has personally helped over 3000 clients with their life insurance needs. Jeff is a best-selling Amazon author and the managing partner of a highly successful insurance brokerage that manages over 2,500 licensed insurance agents across the USA. He has been a featured life insurance source for prestigious websites such as Forbes, Bloomberg, MarketWatch, Nerdwallet, and many more.
- Nationally licensed life insurance agent with over 15 years of experience
- Best selling Amazon author of five insurance sales books.
David Duford is a nationally licensed insurance expert with over 15 years of experience. He has personally helped more than 15,000 clients buy life insurance. David has been featured as an expert source for highly authoritative publications such as A.M. Best and Insurancenewsnet. He also runs one of the largest Youtube channels to help aspiring insurance agents serve their clients better.
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03% of people in the USA live to be age 100. https://www.pewresearch.org/short-reads/2024/01/09/us-centenarian-population-is-projected-to-quadruple-over-the-next-30-years/
