Last Updated: February 18, 2016
State Life Insurance Fund Overview
The State Life Insurance Fund (Fund) is a state-sponsored life insurance program for the benefit of residents of Wisconsin.
The Fund is a nonprofit organization and receives no subsidies from the state. It is not permitted to use commissioned agents, does not advertise, and is exempt from federal income tax. As a result, overhead expenses are minimal.
The Fund was established in 1911 in response to a national scandal over the improper practices of some life insurance companies.
According to the Insurance Commissioner at the time, the Fund was set up ". . . to give the people of the state the benefit of the best old-line insurance on a mutual plan at the lowest possible cost."
Originally the maximum level of coverage available to each policyholder was $1,000. This maximum is now $10,000.
Types of Life Insurance Policies
The State Life Insurance Fund (Fund) pays dividends on all the life insurance it issues. The two types are:
A Term to Age 65 policy is offered by the Fund. The premiums for these policies remain the same until the policy terminates. Term to Age 65 may be converted to any type of whole life insurance prior to age 55. (The Fund does not offer decreasing or annually renewable term policies.)
Term insurance provides death protection for a specific period. Death benefits are paid only if you die within that period. People usually buy term insurance to get the most death protection for their money.
Whole Life Insurance
The Fund offers four different whole life policies. An Ordinary Life policy has premiums paid throughout the life of the policyholder. A Life Paid Up at Age 65 policy has premiums payable only to age 65. A 20-Payment Life policy is paid for 20 years. A Single Premium Life policy has one premium paid at the time of issue.
Whole life insurance has lifetime insurance protection for the insured provided the premium is paid. The most common type is Ordinary Life insurance.
Whole life policies accumulate a cash value which is returned to you if you surrender the policy. You may loan against the policy’s cash value. If you do, the policy’s net value will be reduced proportionately.
Whole life insurance is sometimes bought as an investment. However, very little of your premium will be returned to you if you surrender your policy in the early years. For the first several years, the rate of return on the cash value is low. You should not consider any whole life policy as an investment unless you intend to keep it for ten years or longer.