Interest sensitive whole life insurance, also known as "excess interest" or "current assumptive" whole life insurance, is a slightly different version of the traditional whole life policy. While all the basic features remain the same, there is the potential to increase your cash value through this new program. As with traditional whole life, this new approach offers a guaranteed death benefit payout and guaranteed no-increase premiums throughout the life of the policy unless you choose a limited version that requires slightly larger payments that end at age 65. It is the amount of cash value accumulation that separates these plans.
When you purchase interest sensitive whole life insurance, your insurer will make investments with some percentage of each premium payment that you make. Excess or current interest from those investments may be credited to your policy to make its cash value rise. As a result, not only can your cash value increase more quickly, but your death benefits can also grow. The primary indicator for any values increase will be the current economic conditions. However, you will also be protected from a drop in values below a stated minimum in the event that investments do poorly. Anchoring this plan into current interest rates is an innovative way to open the door for potential cash value increases that can be used in a variety of ways. As with traditional whole life, interest sensitive whole life insurance offers you the peace of mind that comes with knowing your spouse and/or children will be taken care of financially in the event of your untimely death. Money will be in place for end of life expenses. Taking care of your children's educational costs will still be possible, or you might want to endow a charity that has been close to your heart.
You can also use your policy for "living benefits" by borrowing against the value of it. Saving for your children's college funds, setting aside an emergency cache, or paying off your mortgage early to avoid excess interest costs are all ways to make whole life work for you in the present. You might even want to consider converting the policy money to lifetime income after retirement. As a permanent plan with a minimum guaranteed payout, there isn't much that can go wrong. The advantage to interest sensitive whole life insurance is that by having the potential to increase your cash value assets through healthy investments made by your insurer, you have the opportunity to watch your money grow beyond the limitations of straight whole life. If you want to balance out your policy performance, this may be the way to go. Before you make any decisions about buying, adding to, or changing your policy, visit online sites such as LifeInsuranceRates.com. Learn about new policy options and compare prices before you visit a broker. Since it's your money, decide what you want to do with it, and then find an agent who can make your wishes reality.