What Is No-Load Life Insurance?
No-Load Life Insurance Defined
No-load life insurance is a cash value growing life insurance policy similar to whole life insurance, except the premiums are at a lower rate and the cash value matures faster than a “load” life insurance policy. In a typical life insurance policy, a portion of the premium pays for advertising and other company related expenses for the life insurance company.
The premiums paid on a no-load policy go directly to the cash value of the policy. One benefit of a no-load policy is that it is not considered taxable income. Because it falls under the whole life insurance policy category, it is considered a tax shelter. This can provide an excellent investment opportunity.
Life Insurance Brokers
Life insurance brokers typically sell the no-load policy. These brokers are independent agents and might have contracts with a variety of insurance companies, therefore they are not as dependent on commissions as a direct-sale employee of an insurance company. The life insurance benefits also benefit from this type of policy because they are not responsible for the additional expenses of the independent broker as they would be with a direct employee of their company.
The independent broker will typically receive a fee paid by the insurance company for selling the policy on their behalf. This is usually a set-rate fee predetermined by the size of the policy. No-load, also known as “low load,” life insurance policies are not available in every state, so be sure to check if they are available in your state before you prepare to purchase this type of policy.
Premiums For No-Load Life Insurance
No-load insurance premiums can be as expensive as whole life insurance premiums but the returns are greater and the cash value matures more quickly. The type of life insurance available is more of an investment than a death benefit. If you are looking to expand your portfolio, this would be the ideal life insurance.
Although presented differently, they are subject to the same limitations as other policies. Health checks and other medical information must be provided before a policy can be purchased. Heirs must still be chosen if the insured dies.