Traditional Life Insurance is insurance with a guaranteed cash value and protects your whole life where the premium stays the same. It is also called whole life insurance.
There are basic plans for traditional life insurance:
Traditional life insurance, where the protection is until age 100 or a lifetime and matures at age 100 of the insured and has a cash value that builds up every year, this plan is called Permanent Whole Life. This type of traditional life insurance can be payable up to age 100, which is called Ordinary Life Insurance. You also can pay your premium for up to a certain number of years, which is called a Limited Pay Life Plan.
Another plan of traditional life insurance wherein the protection is provided at a specified future time, and the build of cash value is hasty is called Permanent Endowment. This plan’s maturity is at the end of the coverage period, which is usually before age 100. Suppose the premium is payable throughout the coverage period. In that case, it is called a Regular Endowment. Simultaneously, the so-called Limited-Pay Endowment is a premium payable for a certain number of years before the expiration of the coverage.
Term Plan is traditional life insurance where cash values do not accumulate, and the death benefit is provided when the insured dies during a specified period or age. The advantage of this plan is it has the least premium among traditional life insurance plans while it gives the highest amount of protection. If you want your death benefit to remain the same throughout your coverage period, you should have a Level-Term plan. Still, there is also a death benefit that decreases in the amount throughout the coverage, and this is called Decreasing Term. Term plan has a feature of renewability and convertibility. You can convert this plan to a policy that is permanent insurance without evidence of insurability.
Traditional life insurance has a policy wherein you can receive a dividend. This dividend can be used to buy renewable term insurance. You can also use this dividend to reduce the payment of your premium. If you opt not to use the dividend, this dividend will be added to your policy’s cash value. This life insurance is called participating, where the policy owner is entitled to receive a return of excess premiums.
After knowing those traditional life insurances, before purchasing one, make sure to get a policy that fits your need and budget. However, suppose you cannot pay your premium on the due date. In that case, you still have a grace period where your policy continues in full force but remember that your first premium must be made to your insurer or agent for your policy to take effect.
