CLHIA-ACCAP - Consumer Information

A guide to life insurance

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Page 9 of 41

7 LIFE INSURANCE POLICIES TYPES OF LIFE non-forfeiture • Provides protection for your entire lifetime – if kept in force. • Premium cost usually stays level, regardless of age or health problems. • Has that can be borrowed, used to continue protection if premiums are missed, or withdrawn if the policy is no longer required. • Other options allow the policyholder various possibilities of contiuning coverage if premiums are missed or discontinued. • If the policy is participating, it receives dividends that can be taken in cash, left to accumulate at interest, or used to purchase additional insurance. PERMANENT Policy Type Period of Coverage Premium Death Benefits Cash Values Other Non- forfeiture Options Dividends Advantages Disadvantages Whole Life Universal Life Life Life Guaranteed. Usually remain level. Flexible. Can be increased or decreased by policyholder within certain limits. Guaranteed in contract. Remain level. Dividends may be used to enhance death benefits in participating policies. Flexible. May increase or decrease according to fluctuations in cash value fund. Guaranteed in contract. Guaranteed in contract. Flexible. May increase or decrease according to investment returns and level of policyholder deposits. Guaranteed in contract. Payable on "participating" policies. Not guaranteed Most policies are "non-participating" and do not pay dividends. • Initial cost may be too high for a sufficient amount of protection for your current needs. • May not be an efficient means of covering short term needs. • Cash values tend to be small in the early years. You have to hold the policy for a long time, say over 10 years, before the cash values become sizable. • Provides • Premium age • Premium permanent • cash values

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