1. You should know what life assurance represents.



Life insurance is a form of risk cover for the potential occurrence of death during a particular period of time. Life assurance makes provision for the payment of an amount of money upon the passing away of the insured.

It may also be used as a way of saving or investing. This may occur despite the fact that other types of investment may provide a better return than the increase in cash value of a whole life assurance policy.

2. You should know the two basic forms of life insurance policies.

The two basic forms of life insurance policies are term life insurance and permanent life insurance.

Term life insurance has a time limit on the period of cover, for example 10 years. The beneficiary of the policy only receives the death payments if the insured person dies within the specified period of cover.

Permanent life insurance generally combines term life insurance with an investment component to build cash value.

3. You should know the basic features of a whole life insurance policy.

# Fixed Premiums

This means that the life insurance premiums do not rise as the insured person grows older. An indeterminate premium whole life policy is an exception because it provides room for the premiums to be adjusted.

# Whole Life Cover

The policy basically provides cover for your whole life until you die. The duration of a whole life cover policy is until the insured person dies or attains 100 years of age.

# Cash Surrender Value

This is a return on the share of your life insurance premiums that the insurance company invests in real estate, stocks and bonds. The cash value is tax-deferred until you remove it. The cash surrender value will be paid out to you if you decide to stop the life cover of the policy.

# Death Benefit

A payment is made to the beneficiary of the policy after the death of the policyholder. The face value (amount of cover) of a whole life assurance policy remains the same for the entire duration.

# Expensive Life Insurance Premiums

The life insurance premiums are usually expensive because you are paying for an investment in addition to life cover.

4. You should know about the different options presented within whole life assurance.

Single Premium Whole Life Assurance

This policy requires a single large premium payment at the start. The policy is completely paid and no additional life insurance premiums are needed. The policy has an instant cash value. Single premium whole life cover still gathers together a tax-deferred cash value. You may purchase this kind of policy if you have large funds available to use.

Limited Payment Whole Life Assurance

A limited payment whole life policy involves only a limited number of premium payments such as for 10 years or until a certain age is reached. The life insurance premiums will inevitably be higher than the costs of a level premium policy.

Level Premium Whole Life Assurance

The premium payments of this policy are predetermined and are compulsory for as long as the insured is alive.

Indeterminate Premium Whole Life Assurance

The life insurance company will charge an adjustable premium derived from the current estimates of earnings and expense costs. The life insurance premiums will be adjusted if these estimates should change in the future.

That was 4 things you should know about whole life insurance value.