Searching for online whole life insurance requires an individual understand the basics of whole life insurance. First, whole life insurance is in force for a person's "whole" life. Whole life is permanent life insurance that cannot be cancelled by the insurance company at any time as long as premiums are paid according to the contract and the applicant made no misrepresentations regarding his or her health status on the application. The policyholder can choose to surrender the policy, but this usually comes with substantial termination fees. Whole life insurance quotes online.
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Life all permanent life insurance, whole life has a cash-building feature. The premium paid by the policy owner is divided into two parts. The first is applied to the payment of the death benefit. The second is applied to the investment that has been selected for the cash-building feature. The amount of the premium that is applied to each depends on the age of the insured and the investments he or she has selected. The amount applied to the death benefit typically increases in later years, while the amount applied to the investment account typically decreases in later years.
The best rates found for online whole life insurance are usually those that involve the least amount of management on the part of the insurance company. The best rates are also available for those who are in excellent health. Applicants with conditions such as cancer, diabetes or heart disease will pay higher rates than those who are healthy. In some instances, applicants with these conditions will even be denied coverage. Those with treatable health issues such as high blood pressure or skin cancer will likely pay more for coverage, but are not likely to be denied coverage.
Choosing the Best Online Whole Life Insurance Policy
Searching online for whole life insurance will usually provide information on the six main types of plans. A participating plan "participates" in the earnings of the insurance company. The policy owner is paid a dividend based on the company's financial performance. However, dividends are not guaranteed. A non-participating policy pays a fixed rate of interest on the amount in the cash account.
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A level premium policy maintains a set premium amount for as long as the policy is in force. A single premium policy is purchased with a single premium. This type of policy is most often used as an alternative to an immediate annuity. It can also be purchased as a tax-deferred retirement savings, a gift for an employee when a cash bonus is not allowed or as a way to shelter assets from lawsuits.
A limited payment policy has premiums that are due for a specified amount of time rather than for life. Finally, an intermediate whole life policy is one in which premiums can be adjusted depending on the current financial situation of the policy owner.
Suitability Criteria for Online Whole Life Insurance
When searching for online whole life insurance, the term "suitability" is used to describe the type of person or investor for whom the product is best suited. Insurance companies and insurance agents do not have a fiduciary responsibility to their clients. Fiduciary responsibility means that a corporation or an individual has both a legal and a moral duty to act in good faith, and in an honest and loyal manner. An individual with fiduciary responsibility cannot recommend a product to a client without disclosing his or her own personal potential gain in the sale of that product. Certified financial planners have a fiduciary responsibility to their clients.
Insurance agents operate under the requirement of suitability. They must only ensure that their clients are suited to a particular investment or product. Suitability can have many criteria, including risk tolerance, income level or net worth. However, all criteria being equal, a product that is suited for one client may not be suited for another. For this reason, it's imperative that those interested in purchasing online whole life insurance fully understand the contract they're entering into and the ramifications of breaking that contract.
That said, whole life insurance is almost always better suited to those who can make the commitment to paying the premiums according to schedule, if applicable, and to those who can afford to purchase the policy. Most insurance companies and agents will want to make sure policy owners maintain other accounts with liquid assets and cash reserves.
Online whole life insurance will also be suited for those in need of an insurance policy for estate planning purposes. A parent with significant assets will often name an adult child as the beneficiary of a whole life policy so that he or she can pay inheritance, estate or property taxes. In almost all cases, the death benefit on a whole life insurance policy is paid free of federal and state income taxes. The only portion that is usually taxed is the amount that has been earned in the cash account over the years.
Insurance Companies That Offer Online Whole Life Insurance Quotes
All insurance companies offer online whole life insurance quotes. Online calculators allow applicants to enter a range of options to see how their premiums will be affected. For example, choosing a death benefit in increments of $10,000 will show how the premium increases as the death benefit increases.
An insurance company that offers online whole life insurance will either be a mutual company or a public company. A mutual insurance company is one that is owned by its policyholders. A mutual company has a chairman and a board of directors, but it does not issue stock. New York Life, Mutual of Omaha and Massachusetts Mutual are just three of the largest mutual insurance companies. Public insurance companies issue shares of stock and are owned by the stockholders. Shares of stock are typically sold as either common, which has voting rights only, and preferred, which has voting and other rights. Axa Equitable, Metropolitan Life and Prudential are three of the largest publicly traded whole life insurance companies.
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