A policy is defined as a printed document issued to the policyholder by the insurance company stating the terms of the insurance contract. The terms include features about the premium, death benefit, cash value utilization options and other benefits. There are various types of policies that are targeted at different individuals to meet their changing needs. Usually, they combine death benefits with various options to use the cash value.The types of whole life insurance policies are ordinary life insurance, limited payment whole life insurance, current assumption whole life insurance and other special forms of whole life insurance. Ordinary life insurance policies are issued in amounts of $1,000 or more, with premiums payable on an annual, semi-annual, quarterly or monthly basis. Limited payment life insurance is a policy on which premiums are payable for a specified number of years or until death, if death occurs before the end of the period. Variable life insurance places the control on the policyholder to invest the cash value in a broad range of equity, bond and money market instruments. Current assumption whole life insurance is a variation of universal life insurance in which premiums and death benefit are fixed and the cash value growth depends on the market conditions. The main features of the policies are developed according to the needs of the insured and are innovative. Premiums can be fixed and flexible, i.e. payable only for a specific period, and the death benefits can be constant or variable. Additionally, policies come with riders. A rider is an amendment to the policy that modifies it by expanding or restricting its benefits or excluding certain conditions from coverage. Some of the riders are accidental death benefit, which provides additional death benefit under certain conditions, for example if the insured dies as a result of accident; or an unemployment rider, which waives the premium during the period of unemployment. Hence, it is the responsibility of the individual to choose the policies based on his or her needs, the insurance company and the financial resources of the individual. |
