Different Subclass Categories of Whole Life Insurance

The six different subclass categories of whole life insurance are non-participating, participating, indeterminate, economic, limited pay, and single premium Each of these categories defines a different aspect of the policy and can have an effect on the death benefits, premium costs, and more. Scroll down to learn more about the subclass categories of whole life insurance.

Free Insurance Comparison

 Secured with SHA-256 Encryption

Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

Full Bio →

Written by

Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

Full Bio →

Reviewed by Laura Walker
Former Licensed Agent

UPDATED: Nov 22, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.

Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.

There are two basic forms of life insurance; term life and whole life insurance. Term life policies are active for a defined duration of 1 to 30 years. They pay off a specific amount if the insured dies within the duration that is defined (the Term). Whole life insurance is active for the insured’s entire life-span, unless the policy is closed or canceled. Term life is usually used to make sure that a family can meet all of its obligations and goals. A whole life policy offers protection for the family’s financial status.

There are six sub-classes of whole life insurance policies. Each of these categories define a different aspect of the policy and can have an effect on the death benefits, premium costs and other aspects of the policy.

Non-Participating

A Non-Participating policy is a fixed value policy. It does not matter if values change during the policies lifetime. The ultimate cash value does not change. The insurance company takes on the cost of low premiums or experiences a profit if excess premium payments are made.

Participating

Participating is the counterpart to non-participating, with the exception that the policyholder is included. When rates and risk factors change, the insurance company shares the responsibility for cost or benefits with the policyholder. Many people prefer this type of whole life insurance.

Indeterminate

This policy type sometimes has variable premiums. The premium may be more or expensive from year to year. The policy value is not changed as a result of varying premium costs.

Economic

A combination of term and whole life insurances, Economic premiums are used to get extensions of policies without any extra costs. Conversely, if the premiums are not enough in a given year, the benefits will decrease in accordance on the policy.

Limited Pay

Limited pay insurance policies set the required number of payments or investments of cash to be made. Though in effect for the entire life of the policyholder, a 20 year limited pay plan would be paid in full after 20 years.

Single Premium

As its name implies, a single premium insurance policy is exactly that; a single lump sum payment is made for the policy. The policy is active for the rest of the insured person’s life. Overall this type of policy may be the least expensive, though it does require a substantial initial payment at the beginning.

Related Links

Free Insurance Comparison

Compare quotes from the top insurance companies and save!

 Secured with SHA-256 Encryption