Just as there are different whole life insurance policies, if you are looking for a life insurance that offers interest, this is a great option. Interest-sensitive whole life insurance is a type of life insurance policy that adds up the protective benefits of standard life insurance with the potential growth for cash value bound to prevailing interest rates. This life insurance credits the policyholder with interest that displayed alterations in interest rates.
Interest-sensitive whole life insurance offers dynamic and flexible attention to financial planning that most types of life insurance do not. Generally, the standard life insurance policy offers fixed premiums and a certain death benefit. But this whole life insurance allows additional flexibility for premiums and death benefit options. It allows policyholders to borrow or withdraw their cash value even when they are still alive.
However, this insurance is different from every other life insurance policy. This is because of its flexibility, benefits, and many other features included. Although it may be a higher risk to take this life insurance, it has so many benefits that make it the best option.
Advantages and Disadvantages of Interest-Sensitive Whole Life Insurance
When opting for this whole life insurance, you need to be aware of its advantages and disadvantages. Knowing them can help you identify what you get to enjoy as well as the downside of using them. However, the advantages and disadvantages of instant-sensitive whole life insurance are:
Advantages
- It has no risk of loss.
- Quicker cash value growth.
- Quick response to market alteration.
- Tax-free death benefits.
- Higher profit in high-interest rate environments.
- Resilient in death benefits and premium payments.
- Guaranteed interest rates.
Disadvantage
- No investment is resilient.
- It grows slowly in low-interest environments.
- It has a high risk of policy lapsing.
Using this information, you can determine if this whole life insurance is good enough for you or not.
How Much Does It Cost?
Interest-sensitive whole life coverage costs more than standard whole life costs. Depending on some factors, which include age, gender, coverage type and limit, health, lifestyle, and other factors, how much your insurance would cost is evaluated. Aside from these, additional coverage, policy fees, and repayment terms also add to the cost of your interest-sensitive whole-life policy.
What is interest-sensitive whole life insurance also referred to as?
Sometimes, you may come across the term current assumption whole life insurance. It is the same as interest-sensitive whole life coverage. The current assumption is that whole life insurance is another term this life insurance is referred to as.
Aside from this, some insurance companies refer to it as excess interest whole life, single premium whole life, and fixed premium universal life insurance. Irrespective of what it is called, they all refer to the same thing. However, if you come across this when opting for this insurance from an insurance company, you can easily select one without getting confused.
Differences Between Interest-Sensitive Whole Life Insurance and Standard Whole Life Insurance
Interest-sensitive life insurance is identified to be better than the standard whole life insurance due to different factors. The below table illustrates the differences between these two whole life insurance policies.
| Benefits and Features | Interest-Sensitive Whole Life Insurance | Standard Whole Life Insurance |
| Lifetime, permanent coverage | Yes | Yes |
| Cash value accumulation | Yes | Yes |
| Guaranteed death benefit | Yes | yes |
| Guaranteed minimum interest | Yes | Yes |
| Steady growth rate | No | Yes |
| Death benefits and flexible premium | N0 | No |
| Potential for faster growth | Yes | No |
| Can take withdrawals/loans | Yes | Yes |
| Pays the death benefit tax-free | Yes | Yes |
Whether you purchase interest-sensitive whole or standard whole life coverage, you are required to pay for premiums throughout the policy life. This is to keep the policy active.
In Summary
Interest-sensitive whole life insurance may carry a greater risk than other whole life insurance policies, but because of its zeal towards financial growth, it is a good option to consider. To get more out of this insurance policy, you need to be ready to check your policy continuously and make proper adjustments to your financial plans when there is a change in the financial market conditions.
However, it is advisable to contact an insurance agent or broker to help you decide if interest-sensitive whole life insurance is good enough for you or if you would be better with standard whole life insurance.
