Question

whole life policy example​

Answer 1

Answer:

For example if a 25 year old takes a whole life plan at the age of 25 years, he will receive a lump sum payment at the age of 45, the age at which his 20 year premium payment term will expire. He can use this money for his retirement and also his cover will continue till he turns 100 or till the date he dies.

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Answer 2

Whole life insurance, or whole of life assurance (in the Commonwealth of Nations), sometimes called "straight life" or "ordinary life," is a life insurance policy which is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date.[1] As a life insurance policy it represents a contract between the insured and insurer that as long as the contract terms are met, the insurer will pay the death benefit of the policy to the policy's beneficiaries when the insured dies. Because whole life policies are guaranteed to remain in force as long as the required premiums are paid, the premiums are typically much higher than those of term life insurance where the premium is fixed only for a limited term. Whole life premiums are fixed, based on the age of issue, and usually do not increase with age. The insured party normally pays premiums until death, except for limited pay policies which may be paid up in 10 years, 20 years, or at age 65. Whole life insurance belongs to the cash value category of life insurance, which also includes universal life, variable life, and endowment policies.

Uses

Personal and family uses

Individuals may find whole life attractive because it offers coverage for an indeterminate length of time. It is the dominant choice for insuring so-called "permanent" insurance needs, including:

Funeral expenses,Estate planning,Surviving spouse income, andSupplemental retirement income.

Individuals may find whole life less attractive, due to the relatively high premiums, for insuring:

Large debts,Temporary needs, such as children's dependency years,Young families with large needs and limited income.

In the second category, term life is generally considered more suitable and has played an increasingly larger role in recent years.

Business uses

Businesses may also have legitimate and compelling needs, including funding of:[6]

Buy-sell agreementsDeath of key person[7]Supplemental executive retirement plans (S.E.R.P.)Deferred compensation

While Term life may be suitable for Buy-Sell agreements and Key Person indemnification, cash value insurance is almost exclusively for Deferred Comp and S.E.R.P.'s.