As there are more variations and features of Whole Life Insurance, each variation will be discussed individually. This article explains Blended Whole Life and Term Insurance.
This type of policy combines Term and Whole Life Insurance, and the dividends earned are used to buy additional paid-up whole life insurance that ultimately replaces the term insurance.
This product is substantially more sensitive to how well the insurance company operates financially because the insured takes the risk that, if the company has poor mortality or investment experience (after the guaranty maximum premium expires), (1) there might be insufficient funds to buy paid-up additions, and/or (2) the company will substantially increase the term premium. As a result, the premium in a blended product does not feature the guaranteed level premium found in other whole-life policies.
