Types of Whole Life Insurance: What You Need to Know

Shawn Plummer

CEO, The Annuity Expert

When it comes to life insurance, there are a few different types that you can choose from. This guide will discuss the most common type: whole life insurance. This type of interest-sensitive life insurance policy is designed to provide coverage for your entire life, and there are a few things that you need to know before purchasing one. We will go over the basics of whole life insurance policies in this post so that you can make an informed decision about whether or not this type of coverage is right for you.

Continuous Premium Whole Life

Continuous premium whole life is the most common type of whole life insurance. With this policy, you make payments over the entire life of the person who is insured. This type of policy is often called straight life insurance.

Limited-Payment Whole Life

There are different types of limited-payment whole life policies. You can either pay for the policy in a shorter period of time or until a certain age. This type of policy is usually more expensive than a traditional whole life policy.

Even though the policy is paid up at the end of this period, it will not mature until the scheduled date at age 100 or death. It will continue to provide protection and cash value accumulation until that time.

The premiums for limited payment policies are higher than for continuous payment policies because the total premiums have to be paid over a shorter period of time. The shorter the payment period, the higher the premium.

Interest Sensitive Whole Life

Single-Premium Whole Life

A single premium whole life policy is a whole life policy where you only have to pay one premium instead of many. This usually costs a lot of money all at once, but the policy will continue to work, and you will still be covered even if you don’t make any more payments. The money you pay for the policy will also earn interest, so it will be enough to cover all the future premiums. This type of policy also has an immediate cash value.

A single premium policy is a life insurance policy where an interest-sensitive policy owner pays a lump sum amount for the coverage. This type of policy offers the advantage of paying less for the coverage than if the premiums were paid over several years.

Current Assumption Whole Life

Current assumption whole life policies (also known as interest-sensitive whole life) offer flexible premium payments that depend on the current interest rate. The insurance company can change the premium payment depending on how the interest rate changes.

Premiums can be lowered when interest rates are high, and they can be raised when interest rates are low, but there are limits. Usually, these changes happen once a year.

There are two rates of return on the cash value of an insurance policy. The guaranteed rate is one, and the current rate is the other. If the current rate is higher, that’s what you’ll get. But some policies offer a different rate of return, called an interest-sensitive rate.


An economatic policy is a whole life-type policy with a term rider. This means that the policy will last your whole life, and you can add more coverage by paying a small fee. As policy dividends are declared, they are used to purchase additional paid-up insurance. This means that the amount of insurance will go up over time, but the cost for this will stay the same.

4 Types Of Whole Life Policies

Multiple Protection Life Insurance

Multiple protection life insurance policies provide coverage for a person’s entire life. These policies are a mix of whole life insurance and term life insurance. The amount of coverage is higher at the beginning of the policy and lower later on.

What Is Graded Premium Whole Life Insurance?

A graded premium whole life insurance policy is like a regular whole life insurance policy, except the premiums are lower at first and then increase later. They are also known as modified whole life insurance.

Preneed Funeral Insurance

Funeral insurance or preneed burial insurance is a type of whole life insurance that pays for the insured person’s funeral. Funeral insurance pays the face amount when the insured dies.

Long-Term Care Whole Life Insurance

Whole life insurance policies can help you pay for long-term care expenses. If you need long-term care, you can use the death benefit from the policy to help pay for it.

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Types Of Whole Life Insurance

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Frequently Asked Questions

Which type of life insurance policy generates immediate cash value?

The only life insurance policies with an immediate cash value are single-premium life insurance policies, also known as paid-up life insurance policies.

What are the four types of whole life insurance?

The different types of whole life insurance are continuous premium, limited payment, single-premium, current assumption, economatic, multiple protection, and graded premium whole life insurance.

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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