Whole Life Insurance

Whole life Insurance, For Guaranteed Lifelong Coverage

Whole Life insurance is one of the most popular forms of permanent life insurance, and is characterized by a fixed premium, meaning the premium or rate you pay will not fluctuate. Whole Life is considered a no-frills form of permanent life insurance; simple, lower premiums, and as the name suggests, lifelong coverage.

Like many other permanent life insurance policies, whole life insurance policies tend to accrue cash value through a savings component; however, the policyholder does not have control over how and where the money is invested or used.

  • Lifetime Coverage: Insures you for your entire lifetime
  • Guaranteed Benefits: Guaranteed death benefits, regardless of market performance
  • Fixed premiums: Your premiums are guaranteed, meaning they won't fluctuate
  • Guaranteed Cash Value: Tax deferred cash value that increases with time

Differences From Other Permanent Life Insurance

Whole life insurance has many additional benefits over other permanent life insurance products—namely its guarantees. This is also one of the reasons that whole life insurance is generally more costly than other types of permanent policies: The premium, the cash value, and death benefits are all guaranteed.
Whole Life & Other Permanent Life Insurance Compared
  Whole Participating Universal Term 100
Lifetime Coverage Yes Yes Yes Yes
Guaranteed Premiums Yes Yes No - Can increase or decrease to suit your budget Yes
Savings Component Yes Yes - Dividend is based on the insurance company's performance Yes - Investment portfolio is customizable No
Cash Value Yes Yes Yes No
    Learn more Learn more Learn more

Deciding what type of permanent life insurance best suits you and the needs of your loved ones can be tough, particularly because of the complexities of each different kind of policy, and the coverage that each affords. An experienced life insurance broker can help you find the type of policy that is most appropriate for you, whether it be whole life insurance or another option.

Frequently Asked Questions About Whole Life Insurance

What is whole life insurance?

Whole life insurance is a type of insurance that provides a set amount of life insurance coverage at a set premium for your whole life. Your rate never changes and your beneficiaries are entitled to a set benefit no matter when you die, as long as you continue to pay your monthly premium. Whole life insurance also includes a cash value that continues to grow the longer you have the policy, and you can only access that cash value during your lifetime.

What does whole life insurance cover?

Like most life insurance, whole life insurance is not intended to cover particular expenses. You will decide on a death benefit, say $200,000, that will be payable to your beneficiaries when you die. Your beneficiaries can choose to use some of that money to pay your debts or funeral expenses, but there are no restrictions on how they use the funds. It is their money.

How does whole life insurance work?

Whole life insurance is designed to provide peace of mind, cost certainty, and an investment that you can use during your lifetime. Whereas a term life insurance policy will be cheaper than a whole life policy when you’re 30, the cost of a term policy goes up the older you get. A whole life policy will be more expensive to start, but it will never go up in price. The benefit is also set, so whether you die today or in 40 years, the death benefit paid to your beneficiaries is the same. Whole life insurance also directs a portion of your premiums into investments that grow over time. The cash value of these investments is available to you during your lifetime.

Why get whole life insurance?

Whole life insurance is a great choice if you’re looking for:

  • Peace of mind – Your benefit is guaranteed as long as you continue to pay your premiums.
  • Stable rates – Your monthly rate will never go up, no matter how long you live.
  • A tax-deferred investment – A portion of your premiums are invested, and you can access that value at any time.

When should I get whole life insurance?

The best time to get whole life insurance is right now. That’s not a sales gimmick. The fact is that the younger you are when you purchase the policy, the lower your premiums will be, and those premiums will be locked in for life. So if you’re turning 30 tomorrow, you can save yourself a whole lot of money by buying your whole life policy today, while you’re still 29.

For many of us, life insurance is something that you buy when you have kids, to ensure that they will be taken care of should anything happen to you. For others, life insurance becomes a consideration later in life, to ease the financial burden on your loved ones when you die. Everyone has a different reason for getting life insurance, so the timing is different for everyone, but in terms of what it will cost you, sooner is always better than later.

Who is whole life insurance for?

Whole life insurance is for anyone who wants a combination of life insurance and a tax-deferred investment vehicle, but also wants to have control over their monthly expenses. Because the premiums and the benefit never change, whole life insurance is very attractive to people who crave certainty and stability.

Can whole life insurance be converted to term?

Not really. You’d have to cancel your whole life policy and then buy a term life policy. If you’re thinking of switching because your monthly premiums are higher than you would like, there are a few things you should know:

  1. Premiums for term life go up as you get older, while whole life premiums stay the same, so at a certain age, you’ll actually pay more for term life.
  2. If you’ve had your whole life policy for quite some time, you may have some cash value built up in the account, which you could start using to pay a portion of your monthly premium.

Does whole life insurance build cash value? Can you cash out?

Yes, a whole life policy uses a portion of your premium to build up savings that you can use during your lifetime. There will be terms in the policy about how much you can withdraw and at what intervals.

At any time, you can also cancel your whole life policy, and depending on how long your policy has been in place, there may be a “cash out” value, but it may be subject to cancellation penalties.

Note that if you cancel your whole life policy today to get the cash value, if you try to start it again tomorrow, the premium is not guaranteed, and in fact, you’re likely to pay much more the older you get.

Are whole life insurance premiums taxable/tax deductible?

Your whole life insurance premiums are not tax deductible if it’s a personal life insurance policy. If you are a business that pays premiums or a portion of the premiums for your employees, in some cases that would be tax deductible as a business expense.

What does whole life insurance cost?

It depends on a lot of different factors, including the benefit level you choose (how much will be paid to your beneficiaries if you die), your gender, whether you smoke, and your age when you start the policy.

To give you a rough idea, for a $100,000 death benefit, if you start the policy at age 30, the average woman would pay around $50 a month, and the average man would pay around $60. If you start the policy when you’re 50, then the average woman would pay around $115 a month and the average man would pay around $130.


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