It is intended to give coverage for a person’s life, and shell out the lump sum when the policyholder dies. But the whole life insurance is not the same with assurance, since term assurance can only be taken out after a specified amount of years. Provided the policyholder dies within that period, the insurer will need to shell out, and aren’t required to if the policyholder is still alive. However, it guarantees the beneficiaries a cash sum if the policyholder dies.
The policyholder is required to pay premiums during her life or until he reaches a specified age, where premium payments are able to stop but the cover continues. There are 2 types of whole life insurance. First, the maximum cover. Its initial premium plus the sum insured are assured not to be increased for the initial 10 years. When the initial period is over, the plan will be reviewed. Afterwards, the premiums might be increased. The second type is balanced cover. It is designed to bring balance to the required level of life insurance with adequate investment to sustain how much the policyholder will require in the future. The amount the policyholder is required to pay depends on the insured sum, her age and her overall health.