Whole Life Insurance Guide

Overview

Whole life insurance offers two components that are beneficial to both the policyholder and the policyholder’s family – a death benefit and a cash value component that grows over time. The major difference between whole life insurance and term life insurance is that while term life is only available for a set term of years, whole life insurance covers the policyholder for the duration of that person’s entire life. With whole life insurance, whether the policyholder lives to age 65 or 105, the policy will still provide a death benefit and accrue guaranteed cash value for as long as it remains in force.

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Whole Life Insurance Features

Typical features of whole life insurance policies include:

  • Permanent Coverage — Whole life insurance covers the policyholder for as long as he/she lives, with a death benefit payable at any age.
  • Pays a death benefit — The primary reason to buy life insurance is to manage the financial risks of an early death by providing financial benefits to surviving family members and loved ones. Whole life insurance pays a death benefit – no matter when the policyholder happens to die.
  • Builds cash value (tax-deferred) — Whole life insurance offers an investment component – the cash value account of the whole life insurance policy.
  • Level premiums — On a typical whole life insurance policy, premiums stay the same over the duration of the policyholder’s life, offering peace of mind, predictability, and increased affordability.
  • Serves as an investment vehicle — Whole life insurance offers long-term growth in the value of the cash account, a death benefit in case the policyholder dies, and a growing, stable cash asset to draw upon in case of emergencies.
  • Borrow against cash value — As the cash value of a whole life insurance policy grows tax-deferred, it can be a flexible asset to draw upon for certain financial goals like helping to finance a child’s education, or to use as an emergency fund.
  • Protection of money — In many states money invested and made from a whole life policy is protected from creditors and lawsuits.

For a detailed discussion of each feature, check out Whole Life Insurance Features.

Finding the Best Whole Life Insurance

To find the best whole life insurance, policyholders need to decide whether they are good candidates, how much risk they are willing to take, how much flexibility they want in making premium payments, and how confident they feel in the long-term financial prospects of the insurance company backing the policy.

To learn more about how to find a good whole life policy, refer to Best Whole Life Insurance.

Whole Life Insurance Pros and Cons

For most policyholders, the biggest advantage of whole life insurance is that it offers permanent coverage. No matter what twists and turns come up over the course of the policyholder’s life, the death benefit, cash value, and level premiums of a whole life policy remain unchanged. Yet whole life insurance premiums are quite a bit more expensive than term.

For more information on these and other pros and cons, refer to Whole Life Insurance Pros and Cons.

Types of Whole Life Insurance

Whole life insurance is available in a variety of options depending on whether the policyholder wants a higher potential growth of the cash value account, more flexibility in the timing and amount of premium payments, or the flexibility to adjust the amount of death benefit over the course of the policyholder’s life to respond to changing financial needs.

To learn more about these various options and how to find choose a policy for your specific situation, see Types of Whole Life Insurance.

Pitfalls of Whole Life Insurance

Purchasing a life policy can have its drawbacks. Policyholders need to make sure they read the fine print on their whole life insurance policies and understand the risks and responsibilities of their particular plan. Whole life insurance also is more expensive per dollar of death benefit than term life.

For more details on common mistakes made by whole life shoppers, refer to Whole Life Insurance Pitfalls.

Whole Life Insurance Advantages

The biggest advantages of whole life insurance are permanent coverage and the guaranteed cash value investment component. Whole life insurance benefits the beneficiaries as well as the policyholder – if the policyholder dies, the death benefit goes to the beneficiaries, but if the policyholder lives a long life, the whole life insurance policy has a cash value account that will grow over time.

For more details on the advantages of choosing whole life, refer to Whole Life Insurance Advantages.

Whole Life Insurance Performance

When choosing a whole life insurance policy, look for a reputable insurance provider with the financial strength to keep its promises for the long term. Insurance companies provide detailed information about the financial performance of their whole life insurance plans – be sure to get the scoop on what to expect from a whole life insurance policy.

For more details on how to measure whole life insurance performance, refer to Whole Life Insurance Performance.

No Medical Whole Life Insurance

It is possible to get whole life insurance coverage without having to take a medical exam – but make sure to do some research in order to be confident that the insurance company offering the policy is reputable and financially sound.

For more details on what to expect and what to avoid, refer to No Medical Whole Life Insurance.

Who Should Buy Whole Life Insurance

People buy whole life insurance when they want permanent insurance coverage that lasts for the duration of the policyholder’s life, and/or they want a life insurance policy that also serves as an investment. Other buyers of whole life insurance include those who want to use the cash value component as a tool for estate planning or to cover estate taxes or final expenses

Get in touch with a licensed insurance specialist to find the best whole life rates on the market. Ask for a free quote report today. Start Now.