Current Assumption Whole Life – Current assumption whole life plans (sometimes referred to as interest-sensitive whole life) offer premium payments that are adjustable and dependent on the current interest rate. Depending on how the interest rate fluctuates, the insurance provider might adjust the premium payment.
- When interest rates are high, premiums can be cut, and when interest rates are low, premiums can be raised, but there are limits.
- Typically, these alterations occur once a year.
- There are two rates of return on an insurance policy’s cash value.
- One is the promised rate, and the other is the current rate.
If the current rate is greater, you will receive that rate. However, several plans provide a varied return rate, known as an interest-sensitive rate.
What can be said about variable whole life insurance?
Variable life insurance is a permanent life insurance policy that includes an investing component. The cash value account of the policy is invested in a variety of subaccounts. A sub-account functions similarly to a mutual fund, except that it is exclusive to variable life insurance policies.