Chances are you’ve just finished doing your homework by reviewing our current list of the best whole life insurance companies. You’ve chosen one or more products that seem right for you. Congratulations!
The next step is getting the actual whole life insurance quotes and understanding exactly how the coverage works. This will all be explained within the quote or otherwise known as the illustration.
Sometimes, insurance quotes can seem complicated and overwhelming.
Don’t worry. We’re here to help you understand what those quotes mean in practical terms so you can make a good decision.
Ready for the mystery to be removed from whole life insurance quotes? Here we go!
Whole Life Insurance Quotes Include an Illustration
All whole life insurance quotes come with something called an illustration. The illustration provides a great deal of information pertaining to how the whole life insurance policy will perform, the benefits included with the coverage as well as potential future performances.
Sometimes, the way illustrations are presented can make them seem a bit dull, a bit long and bit complex, but they are extremely important because they allow you to assess the entire whole life insurance quote on more than the cost of premiums.
Not all whole life insurance illustrations will be alike. However, all of them will contain many standard key features that we will explain below.
Introduction & Summary of Coverage
The first part of any whole life insurance illustration is the company introduction. Within this section there is generally a brief introduction that discusses the life insurance company’s history.
After a brief company introduction, the illustration will provide a policy overview section or a summary that outlines the whole life insurance coverage.
This section provides a description of the key components included within the whole life insurance coverage. It can be best described as being similar to a terms and definitions page.
One primary benefit of a whole life insurance policy is the cash value feature. All participating whole insurance policies have a guaranteed cash value component, as well as a non-guarantee cash value component.
Both the guaranteed and non-guaranteed cash value components will show the annual cash value growth within the illustration separated into two columns.
The reason for a non-guaranteed cash value column lies within the potential dividend earnings. Since dividends are not guaranteed they are represented within the non-guaranteed cash value component.
Dividend amounts can also fluctuate so the non-guaranteed column should only be viewed as a potential possibility of future cash value earnings.
Projected Annual Dividend
In 2016, there were more than 290 million life insurance policies in force in the United States. Out of the 290 million life insurance policies in force, a large portion of those where whole life policies that paid a dividend.
Policies that pay a dividend are called participating. That name was given because the policyholder shares in the insurance company’s excess profit in the form of a dividend.
Within the whole life insurance illustration located on the non-guaranteed column, you will see the projected annual dividend. Again, it is important to understand that dividends are not a guarantee.
Whole life insurance quotes can also include both a guaranteed death benefit and non-guaranteed death benefit.
In both cases, the death benefit is the amount the designated beneficiary will receive upon the insured’s death, provided the policy is in force.
The guaranteed death benefit is based on the amount of coverage requested and projected premium payments. Every policy has this kind of death benefit.
But some also have a non-guaranteed death benefit in the illustration. This is another projection that factors in the insurance company’s dividend scale along with the dividend option and coverage requested on your application.