There are a few different types of life insurance protection available to aid you and your family. Term life insurance offers coverage for a specified period of time, while NCSF whole life coverage guarantees protection for the duration of your lifetime. Qualifying is as simple as satisfying all of the terms of the coverage plan. When you go about choosing a plan, realize that there are both, participating and non-participating plan options. Speak to an agent that can describe all of the potential additional benefits to whole life coverage.
Participating versus non-participating plans
Here is how the two plans differ. Non-participating plans have a set premium with a set payout, which means that, following the death of the policyholder, the insurer will pay the agreed upon amount as per the policy wording. In the event that any future costs were originally underestimated, leaving a gap between the amounts paid in premiums and the policy amount, then the policy provider accepts all risk and winds up paying the difference.
On the other hand, participating plans resolve this issue in a different manner. Just as with non-participating plans, premiums are set at a specific level. When the insurance company experiences excess profits, commonly referred to as dividends, they return that money to the policyholder. While these dividends are not guaranteed, they are tax exempt.
Different insurers will often approach how they structure these two plans so it’s important that you discuss the matter in depth. The premiums charged will likely depend upon the length of time the policy has been in effect. The longer the policy has existed, the lower the premium will be.
The vast majority of companies view the dividends as tax-free income to be paid to your beneficiaries upon your death. NCSF has a unique program with regards to NCSF whole life policies so that it allows you to access dividends while still living. Dividends received from your whole life coverage will remain accessible to you during your lifetime. They remain tax-free, which allows you to grow your wealth without having to pay income tax.