How Many Types of Whole Life Insurance Are There?

HOW MANY TYPES OF WHOLE LIFE INSURANCE ARE THERE?

There are two types of whole life insurance (which should not be confused with the variations of whole life insurance.)

(1) Ordinary Life Insurance
(2) Limited Payment Life Insurance

Ordinary Life Insurance is also called Continuous Premium Whole Life where the premiums will be paid until the insured's death. Since the premiums are expected to be paid throughout your life, this type of whole life policy tend to have lower premiums, yet this in turn generates lower cash value within your policy.

Most of the time, this type of insurance is used as a contract that provides permanent protection for the lowest total premium outlay along with some flexibility to meet the changes in your needs and circumstances if you happened to live longer or happened to have an ordinary life expectancy (i.e. you may use this policy for protection during the years that you need, yet may want to convert the cash value into an annuity to generate income or may want to convert the policy into a reduced amount of paid-up insurance policy.)
If your objective is to get the maximum amount of permanent insurance protection per dollar premium outlay, then this type of policy can be your best choice.

Limited Payment Life Insurance is where you pay your premiums for a specific number of years (most extreme case would be Single-Payment Whole Life Insurance, where you make one payment to pay up for your policy.) Needless to mention, since you are not going to be extending the payments throughout your life, premiums tend to be higher in this type of policy. Because you pay higher premiums in this type of policy, you generate higher cash value in return. And this higher cash value can be used as your retirement fund in the future.
You should consider the fact that if the insured dies within the first few years of the policy, he would actually pay more in premiums for his death benefit than the Ordinary Whole Life Policy, yet long-lived insured would indeed pay considerably less in premiums than the Ordinary Life Insurance.