When buying whole life insurance, you have to go through a medical examination, and the result of this determines the amount of the premiums you will have to pay. The policy owners are placed into certain risk categories, depending on whether they are smokers or non-smokers, and on their likeness of heart disease, hepatitis C, stroke, multiple sclerosis, diabetes, different types of cancer, etc.

The higher the risk of getting these illnesses, the higher the premium will be. Also, there are those who practice dangerous sports or any other risky activities- they will pay higher premiums, too.
There are six main traditional forms of whole life policies:

• Non-Participating Whole Life Insurance

All the values of the policy- death benefit, premiums and other cash values - are previously determined for the entire period of the contract and can not be altered afterwards. If the claims are quite high, the insurance company most probably will keep the difference. So, we can mention as advantage of this type of policy the low out-of-pocket payments and the fixed costs. Unfortunately, since it is non-participating, it will not pay you any bonuses.


• Participating Whole Life Insurance

The participating policy pays bonuses or refunds, meaning that the company shares the profit with the policy holder. These bonuses or dividends can be used to reduce the cost of your premiums, or to buy additional insurance which will increase the amount of your coverage. Within these two traditional whole life insurances, the non-participating and the participating, there are many different plans to choose from.


• Limited Payment Whole Life Insurance

It is a type of policy that gives you the chance to pay premiums for a limited number of years instead of annual premium payments. So, it determines a certain number of premium payments, while it still offers you protection for your whole life. The disadvantage of limited payment is that the premiums are way higher than in the case of ordinary whole life coverage because they have to be paid in less time, such as 10 or 20 years, or up to a certain age, like 65 or 80.


• Single Premium Whole Life Insurance

This type of whole life coverage can be seen as a sort of investment, because it involves one large amount of premium payment at a determined time. It is also a form of limited payment insurance. This way, the policy is fully paid up and no annual premiums have to be paid further. The cash value of the policy depends on the amount of the single premium.


• Indeterminate Premium Whole Life Insurance

This is similar to the ordinary whole life policy, but it provides adjustable premiums. The annual premium may vary from one year to another, but it can never go above the maximum premium determined in the policy.

These types of whole life coverage mentioned above are the most common and well-known ones. Many people are having dilemmas whether a term life insurance or whole life coverage is the best for them. But the fact is that this decision depends on what you expect from your life insurance. Term insurance is best to replace income for younger families when the money maker of the family dies. On the other hand, if you want to make sure that there is a death benefit when you die, whole life coverage is certainly your best choice.