Whole Life 101

Making sense of whole life insurance.

Premium payment options - what do they mean?

When it comes to premiums for whole life insurance plans, many insurers offer people different ways to cover the required payments. Typically, when people think about permanent coverage, they believe they will have to pay premiums for life. But there are other options available to clients.

With 8 Pay, 10 Pay, and 20 Pay, you pay your premiums for a set period. The number signifies the number of years you are paying premiums. For example, for 8 pay, you are paying premiums for 8 years. Once the period there are no more premium payments required.

What is cash value?

Cash value is the savings component attached to permanent life insurance plans. When you make premium payments, a portion of that fee is set aside and saved. This becomes your cash value. The longer you own the plan, the more your cash value savings grow.

How can I use my plan’s cash value?

You can use the funds in your cash value for financial emergencies like paying for premiums when you can’t or needing extra cash in your life. You can think of this process as taking out a loan, but instead of borrowing from a financial institution like a bank, you are borrowing from your own plan.

What are dividends?

Dividends are portions of an insurance company’s earnings that are paid to policyholders. Dividends are essentially a share of a public company’s profit. The dividend amount paid to you depends on the amount of money you’ve paid into a policy. There are both guaranteed and non-guaranteed dividends on whole life insurance policies.

Our plans provide you with five dividend options to choose from:

Cash Payment*
Dividends are paid to the policy owner in a lump sum.

Paid-Up Additions
Use the dividends to purchase more participating life insurance on the life or lives of the insured. This additional “paid-up additions” also earn dividends and cash values.

Annual Premium Reduction
Your dividend is applied towards the next annual premium payment, with the deficiency paid to the policy owner.

Cash Accumulation**
Dividends are paid into an account that will earn interest compounded annually at a rate set by Empire Life.

Enhanced Coverage
Dividends are used to buy one-year term life insurance additions on the life or lives of the insured up to the maximum term amounts permitted.

There is a Lifetime Guarantee** feature with the Enhanced Coverage Dividend option. This guarantees that, regardless of dividend performance, the amount of one-year term life insurance plus the amount of any paid-up additions on the life insured will never be less than the Enhanced Coverage amount for the life insured.

* May be subject to income tax. See policy contract for details.
** Subject to specific conditions. See policy contract for details.

What is a death benefit?

A death benefit is a name for the amount of coverage your plan provides. Should you pass away during your coverage, the policy pays out this benefit to your selected beneficiaries. Your beneficiaries can choose to use this benefit in any way they wish. Death benefits are typically paid in a lump sum and are tax-free.

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