What is a combination or blended whole life policy and how does it relate to term life?
A combination life insurance policy, sometimes called a blended whole life policy, combines whole life and term insurance. A typical combination policy might start out at 60% whole life and 40% term. Dividends the policy pays are automatically used to buy additional whole life coverage, which gradually replaces the term insurance. You pay lower premiums than for regular whole life coverage, but you earn lower cash values in the earlier years of the policy. After several years have passed, the growing portion of the combination policy that provides whole life coverage will have completely replaced the term insurance. Combination policies often appeal to people who want life insurance for their old age, but also want to keep their premiums fixed — and unusually low — while they’re still young.
