Whole life insurance, is a life insurance policy that remains in force for the insured’s whole life and requires (in most cases) premiums to be paid every year into the policy. There are several types of whole life policies most common whole life insurance policies are participating or non participating whole life policy. Whole Life insurance provides with the certainty of a guaranteed amount of death benefit and a guaranteed rate of return on your cash values. And premium in whole life policy are guaranteed to never increase for life.
With participating whole life insurance policy clients have an opportunity to earn dividends. Whole life policy guarantees a minimum death benefit and cash value, dividends made from the participating insurance policy can give the opportunity to receive an enhanced death benefit and cash value growth. Dividends are a way for the company to share part of its favourable results with policyholders. These dividends are not guaranteed and are based on the performance of funds they are invested. All the dividends, if left in the policy, can provide an offset (and more) to the eroding effects of inflation on your coverage amount.
Advantage of Mortgage Insurance
- Credit insurance from creditor/mortgage institution provide coverage only against the outstanding credit or mortgage and often expensive. Whereas a life insurance can provide you protection against any kind of loan or credit.
- Your life insurance premiums are guaranteed and remain the same for the duration of your coverage.
- In future based on your needs you can change your term insurance coverage into permanent life without undergoing any medical checkup.
- You have the control over the insurance plan (you are the owner of policy and your family members are beneficiaries not the lending creditor/mortgage institution)
- Remain in forces even if you change your mortgage lending institution.
- Underwriting done at the time of application, rather then at the time of claim.
| Mortgage insurance through a mortgage lender | Personal life insurance/along with critical illness insurance & disability insurance rider | |
|---|---|---|
| Who does the insurance cover? | Only the individual(s) listed on the mortgage. | You, your partner and your children. |
| What does the insurance cover? | Only the balance of your mortgage. | Whatever you need it to cover. In addition to your mortgage, you can cover debts like your line of credit, credit cards, too. |
| Who gets the benefit if I die or become seriously ill or become disable? | The mortgage lender is automatically the beneficiary. | You decide who gets the insurance benefit and how it’s used – to pay your mortgage, medical expenses or your child’s education – whatever is best for you and your family. With Disability insurance you may be able to get a per-determined amount that can take care of your monthly mortgage payment and other expenses while you are disable. |
| What happens as my mortgage balance decreases? | The coverage amount decreases as the mortgage balance decreases. When the mortgage is paid off, the coverage ends. | The amount of coverage you have stays the same for as long as you own your policy – unless you decide to change it. |
| What if I switch mortgage lenders? | You may lose the coverage and might need to reapply. | Your coverage stays the same – unless you decide to change it. Since your coverage is not tied to your mortgage, you can carry it with you if you move again. |
| What if I want to change my insurance? | You can’t. | You may have the flexibility to adjust the type and amount of your insurance, or even convert to a permanent solution. |