Life cover is an agreement that ensures policy holder or his /her dependants to receive all the agreed compensation either after his/her death or at the time of critical illness. This agreement is signed between insurance company and policy purchaser. At present insurance sector is flooded with several life cover policies that offer same benefits but on different terms and conditions.
Among various categories of life cover policies, whole life insurance is very popular and commonly purchased. This policy fulfills both purposes of protection and investment.
What is whole life insurance cover?
Whole of life insurance policy is an agreement between policy holder and insurance company. Under this policy insurance company is liable to pay agreed some of compensation to policy holder or to his/her nominee in case of death or critical illness. In exchange of these benefits policy holder is asked to pay fixed sum of money to insurance company. This sum of money is called “Premiums” that are payable till the policy holder is alive.
The premiums of whole of life insurance are expensive as compare to other policies. Moreover this policy offers cash value or surplus value to policy holder if they cancel their policy. The working of whole life insurance might be little hard to understand because of the involvement of “investment” concept.
The monthly premiums that you will pay under this policy are divided into two parts; one is used in saving and other part is used to buy some units in investment fund. And this entire investment concept is managed by insurance provider. Even most of the insurance companies waive off the premiums of whole of life insurance of those policy holders who cross their age of 50 or 60 years.
Generally whole life insurance policy is reviewed after every ten years. If from investment point of view it is performing badly than insurance company might increase your premiums just to ensure that assured amount will be attained.
Types of Whole of life insurance:
1. Maximum cover
2. Balanced cover
3. Non profit cover
4. With profit cover
5. Low cost cover
6. Universal cover