What is the difference between increased whole life insurance and traditional whole life insurance?

Incremental whole life insurance and traditional whole life insurance are two different insurance products, and although they both belong to the field of life insurance, there are significant differences between them in terms of the growth of the sum assured and the returns. The following are the main differences between them:

I. Increasing Sum Insured

Traditional whole life insurance has a fixed sum insured, and in the event of the death of the insured, the insurance company will pay the agreed-upon benefit to his or her designated beneficiary. The sum assured is agreed upon at the time of the contract and does not change over time.

In contrast, the sum assured of an incremental whole life insurance policy grows dynamically. The sum assured of this insurance product increases over time, usually by a certain percentage each year. When the insured dies, the premium paid by the insurance company increases as well. Thus, incremental whole life insurance not only provides death benefit, but also has the function of increasing the sum assured.

II. Income

Traditional whole life insurance has a relatively fixed income, which mainly comes from the premium paid by the insurance company when the insured dies. This premium is usually agreed upon in the contract and is a fixed amount. As a result, traditional whole life insurance has relatively low returns.

Incremental whole life insurance, on the other hand, offers relatively high returns because the amount of coverage keeps growing. In addition to paying an agreed-upon benefit in the event of the insured's death, incremental whole life insurance pays a certain amount of incremental earnings to the policyholder, based on the percentage of increase in the sum assured. This incremental gain may be given annually or in a lump sum at the end of the contract. As a result, incremental whole life insurance has relatively high returns.

Three: Costs

Traditional whole life insurance has relatively low costs due to the fixed amount of coverage. Increasing whole life insurance is relatively expensive because the amount of coverage is constantly increasing.

In summary, the main difference between incremental whole life insurance and traditional whole life insurance is in the area of increasing coverage and benefits. Traditional whole life insurance has a fixed amount of coverage and relatively low returns, while incremental whole life insurance has a dynamically growing amount of coverage and relatively high returns. Consumers need to choose between these two types of insurance products based on their needs and actual situation.

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