B. Traditional Whole Life Insurance

Permanent

A general term used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured(or until age 100) as long as the premium is paid

Limited payment

Condensing premium payments over a shorter period of time

Cash value

Created by the accumulation of premium, is scheduled to equal the face amount of the policy when the insured reaches age 100(the policy maturity date), and is paid out to the policyowner (Remember: the insured's and the policyowner do not have to be the same person.) Cash values are credited to the policy on a regular basis and have a guaranteed interest rate

Single premium whole life(SPWL)

Pay one lump some for the premium, immediate cash value

Ordinary Whole Life(straight life)

Policyowner will pay until they die or until 100. If they live to 100 they keep their death benefit and have no coverage. The basic whole life policy

Whole Life Insurance

Provides a lifetime protection, and includes a savings element (or cash value)

Death Benefit

The death benefit is guaranteed and also remains level for life

Level premium, Death benefit, Cash value, Living Benefits

The following are characteristics of whole life insurance:

Living benefit

The policyowner can borrow against the cash value while the policy is in effect, or can receive the cash value when the policy is surrendered. The cash value, also called nonforfeiture value, does not usually accumulate until the third policy year and it grows tax deferred

Level premium

The premium for whole life policies is based the issue age; therefore, it remains the same throughout the life of the policy

Ordinary whole life, limited payment, and single premium

What are the three types of payments?