Life Insurance Learning Center - Whole Life Insurance Types
Straight Life Insurance, Part 2
If you noticed, the cash values in the example that we gave you up increased slowly at first, and then more dramatically later on. This is because typically due to administrative and sales costs that go with issuing a new policy, the cash values are increased slowly or hardly at all to make up for these expenses.
Remember that the amount of protection on a life insurance policy is the difference between the death benefit and the cash value at any given time during the coverage. For example, using the example we provided above, let's say that the insured is 47 years old, and in our example, we stated that the cash value after twelve years of coverage was $12,000. Taking the death benefit of $100,000 and taking the cash value of $12,000 away from it, you get $88,000. If the insured dies, he/she gets paid $100,000, but the protection at this time is $88,000.
Therefore, realistically, as the policy becomes older, the protection on the policy grows less and less because the cash value increases while the death benefit stays the same.
To summarize, in a straight life insurance policy, the death benefit stays the same, the cash value increases more and more as the policy ages, and the protection component decreases.
Get a free life insurance quote today!
The Learning Center Main Intro
Life Insurance Wiz.com
FREE LIFE INSURANCE QUOTE, CLICK HERE!