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Whole Life Market Share
Whole life insurance is perpetual life insurance that provides lifelong coverage.
Whole life insurance has three guarantees:
- A guaranteed minimum rate of return on cash value
- An agreement that premium payments will not increase
- A guaranteed death benefit that will not decrease
There are people who use the term “whole life insurance” very broadly to define any life insurance that offers lifelong coverage. Nevertheless, there are other types of permanent life insurance which provides lifelong insurance. These are entirely different from traditional whole life insurance which includes:
- universal life insurance
- variable life insurance
- survivorship life insurance
Choosing Life Insurance Benefits
Once an insurance policy is bought, one or more beneficiaries must be designated to receive the death benefit. It is good to note that the payout split does not necessarily have to be equal for all of the registered beneficiaries. The policyholder may choose to assign the percentage for each, such as 60% to Karen and 40% to Gary.
Designating one or more contingent beneficiaries is also a good option. These people serve as the policyholder’s backup plan if all the designated primary beneficiaries are deceased when the policyholder passes away.
Designating beneficiaries and keeping the policyholder’s designation up to date with their wishes are equally important tasks. Regardless of what the will says, life insurance companies are contractually compelled to pay the beneficiaries designated on the policy. Checking and verifying beneficiaries at least once a year is a good practice to do.
Considerations Taken in Whole Life Insurance Pricing
The coverage amount the policyholder chooses help to determine their rate, along with the following:
- age and gender
- height and weight
- previous and current health conditions (i.e smoker)
- health history of parents and siblings
- nicotine and marijuana use, including nicotine patches and gum
- substance abuse
- credit
- criminal history
- driving record (especially DUI convictions and moving violations such as speeding tickets)
- life-threatening hobbies and activities like piloting planes and rock climbing
- income
There are various features and provisions that can affect whole life insurance costs as well:
- Payment Period – the policyholder has the option of whether to pay the entire policy within a short time frame like 10-20 years. The premium would increase significantly, given the front-loading of payments.
- Guaranteed Return Rate – some insurance companies offer a higher guaranteed return, which would mean higher annual premiums.
- Dividend Crediting – many whole life policies pay out a dividend in which policyholders can choose the mode of receiving it. Getting the dividend payments as a credit to premiums reduce annual out of pocket cost.
Life Insurance Market Share
Whole life insurance makes up over one-third of the individual life insurance market as measured by premiums paid. This is primarily driven by its high cost.
Type Market share based on premiums paid
- Whole life insurance 35%
- Universal life insurance 36%
- Variable universal life insurance 7%
- Term life insurance 22%
Source: LIMRA, based on sales for the first three quarters of 2019
Whole Life Insurance: Is it the Right Choice for You?
The following are questions and options to help a potential life insurance buyer decide if whole life insurance is the right choice for them:
- Do you need life insurance for 30 years or more?
- Do you need a cash value?
- Do you want life insurance that offers flexible payments or the payout amount?
- Do you need a payout once you pass away, or once you and your spouse pass away?
- Are you willing to pay more for life insurance
When you apply to purchase life insurance, your request goes through underwriting, which is how the insurance company determines your eligibility and premiums. The average underwriting process takes about three to four weeks.
Permanent life insurance lasts a lifetime and includes an investment portion that can be used later in life. Because of this extra cash component, you'll pay substantially more for permanent policies than for term life policies.
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To know how much life insurance will cost you, get the figures with our free, user-friendly life insurance calculator. No matter if you are still contemplating or have already decided to compare and buy the perfect life insurance for you, it is essential to figure out how much you need and how much it would cost would greatly help you ensure your choice. Utilize our free life insurance calculator and find helpful tips to calculate the cost of the policy that best fit your needs.
Term life insurance is a type of life insurance that is fulfilled for a specific number of years – called as the term, before it expires. If an enrolled individual – the policy holder – dies before the specified term is over, his/her beneficiary, who is typically an immediate family member, receives a death benefit: a tax-free lump sum of money which is used for funeral expenses, pay any unfinished loan or properties bought by the member, or to fulfill other financial obligations of the beneficiary.