Whole Life Insurance

What Is Whole Life Insurance?

Whole life insurance is a type of permanent life insurance designed to provide lifelong coverage as long as required premiums are paid. Premiums are generally level, and policies typically include a cash value component that may grow on a tax-deferred basis according to the policy's terms.

Common Features

• Level premiums designed to remain the same for the life of the policy.
• Cash value that may be borrowed against, subject to policy terms and tax considerations.
• Death benefit paid to beneficiaries when the insured passes away, subject to policy terms.

Important Considerations

• Premiums are typically higher than term life for the same face amount.
• Loans or withdrawals from cash value reduce the death benefit and may have tax implications.
• Surrender of the policy in the early years may result in little or no cash value.

Things to Compare

• Carrier financial strength ratings
• Guaranteed cash value schedule
• Dividend history (for participating policies — dividends are not guaranteed)
• Riders, including accelerated death benefit and waiver of premium

Talk With a Licensed Advisor

See also Term Life and Final Expense.