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Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known small loss to prevent a large, possibly devastating loss. An insurer is a company selling the insurance; an insured or policyholder is the person or entity buying the insurance. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice ofappraising and controlling risk, has evolved as a discrete field of study and practice.

Types of Whole Life Insurance

There are three basic types of whole life insurance, level premium insurance, limited pay insurance and graded premium insurance.

What is level premium insurance?
Level premium insurance is a type of whole life insurance in which premiums remains same throughout the life. In other words, premiums are constant from the beginning to the demise.

What is limited pay insurance?
The term refers that premiums will have to be paid within specified duration as agreed at the time of entering the policy. In other words, you have to pay premiums 5 to 10 years before the insurance policy is expired.

What is graded premiums?
The term refers that initial premiums are lower and later premiums are higher. The graded premium policy facilitates to those who has no sufficient funds at initial while years of buying insurance policy.

Conclusion:
There are three basic types of whole life insurance polices namely, level premium insurance, limited pay insurance and graded premium insurance.
Posted by jimmy at 6:46 AM
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