Whole life coverage is one of the most common kinds of life insurance available and many people have at least a basic understanding of how it works.
For example, many people understand that this kind of whole coverage provides both lifetime coverage and an investment tool, should they choose to use it as such.
Yet, when it comes to whole life insurance, California residents might not be aware that there are different kinds of policy choices available. As you’re shopping for whole like insurance, California carriers may discuss with you the choices of traditional, interest-sensitive, and single premium policies.
A traditional whole life policy is fairly straightforward: It provides you with a minimum rate of return on the cash value portion – guaranteed.
Interest-sensitive coverage, on the other hand, provides you with a variable rate, which can in turn provide you with more flexibility with your whole life insurance. California carriers can explain, for example, their policies on increasing your death benefits without worrying about also increasing your premiums. Be sure to discuss with your carrier the implications of the economy and the rate of return on your cash value portion.
Simply put, the single premium option is for the big spenders. These folks can purchase upfront the entire policy of whole life insurance. California agents might vary on the cost of the single premium, so be sure to discuss with your agent the details about prices as well as accrued cash value and tax shelter benefits.
By Sydney Leman