Whole life insurance for coverage that lasts.
Whole life insurance is permanent coverage designed to last your entire life, with level premiums and a cash value that builds over time. Because it offers predictable terms, many people choose it for lifelong protection.
Permanent coverage with predictable terms.
Whole life insurance provides a death benefit for as long as you live, as long as you pay the premiums. Generally, the policy sets your premium when you buy it, and the premium stays level. In addition, the contract states the death benefit.
A portion of each premium goes into a cash value account that grows at a rate the contract states. Some policies, usually from participating insurers, may also pay dividends, but the insurer does not guarantee them. You can borrow against the cash value or withdraw from it. However, doing so affects the policy.
Because of its predictability, whole life often serves lifelong protection, final expenses, legacy goals and the conservative, long-term part of a financial plan.
How it works, step by step.
Choose your coverage
Your agent compares carriers and whole life designs against your goals, budget and the amount of coverage you want. As a result, you see the options side by side.
Apply and underwrite
The carrier reviews your age and health, but the process varies by product. Some products involve a medical exam, while others use simplified health questions.
Pay level premiums
Premiums generally stay fixed, so your cost remains predictable while the policy builds cash value.
Coverage for life
When the insured passes away with the policy in force, the insurer pays the death benefit to the beneficiaries. In general, they receive it free of federal income tax.
Whole life vocabulary.
Guaranteed cash value
Guaranteed cash value grows at the rate the contract states. Therefore, you know the minimum growth in advance, as long as you pay your premiums.
Dividends
Some policies from participating insurers may pay dividends. However, dividends vary from year to year, and the insurer does not guarantee them.
Paid-up additions
Paid-up additions are small amounts of extra insurance that dividends often buy. As a result, they can increase both the death benefit and the cash value.
Policy loan
A policy loan comes from the insurer, using your cash value as collateral. Because unpaid loans and interest reduce the death benefit, monitor them carefully.
Who it’s for, and who it may not suit.
Often a good fit
- Coverage that lasts your entire life matters to you, provided you keep paying premiums.
- Level premiums appeal to you because they stay predictable.
- A lasting legacy or a way to cover final expenses is part of your plan.
- A conservative, guaranteed component fits your financial plan, so permanent coverage makes sense.
- Planning for a dependent who will need lifelong support is a priority.
May not be the best fit
- Coverage for only a limited period is your goal, so term life usually costs less.
- Flexible premiums matter to you, but IUL and other universal life designs offer more flexibility.
- Paying premiums for the long term may not be possible for you, because whole life requires steady payments.
- The maximum coverage for the lowest premium today is your priority, so term may suit you better.
What carriers look at for whole life.
Because carriers offer whole life in several underwriting styles, the path to approval differs from one carrier to the next.
Age
Your age when the carrier issues the policy determines your premium. However, issue ages differ by carrier.
Health history
Some policies require a medical exam. In contrast, others use simplified-issue health questions, and a few have limited or no health questions.
Tobacco use
Tobacco and nicotine use usually affect pricing and available plans.
Coverage amount and state
Minimum and maximum coverage amounts depend on the carrier. Likewise, the plans available depend on your state.
Whole life questions, answered.
Can whole life premiums increase?
Whole life premiums generally stay level for the life of the policy, as the contract states. However, guarantees depend on the claims-paying ability of the issuing company.
How does the cash value work?
Part of your premium builds cash value that grows at the rate the contract states. You can then access it through policy loans or withdrawals. However, these affect the death benefit.
Are dividends guaranteed?
No, because the insurer determines dividends each year, and it does not guarantee them.
What if I can no longer pay premiums?
Many policies offer options, such as using cash value to keep coverage in a reduced form. Because the options depend on the policy, review them with your agent before you buy.
Is whole life better than term life?
Neither type is better for everyone. Term life generally costs less for a set period, while whole life provides lifelong coverage and cash value at a higher premium. Therefore, your agent will help you compare the two for your situation.
*Guarantees depend on the timely payment of premiums and on the claims-paying ability of the issuing insurance company. The insurer does not guarantee dividends, if any. Loans and withdrawals reduce the death benefit and cash value, and they may have tax consequences. Products, features and availability vary by carrier and state, and underwriting applies.
Term Life Insurance
Protection for a set number of years, while premiums stay level.
Learn moreWealth Building (IUL)
Permanent life insurance, so it lasts a lifetime, with an index-linked cash value component.
Learn moreFinal Expense Insurance
Smaller permanent policies that help cover end-of-life costs, so your family does not carry them alone.
Learn moreReady to explore lifelong coverage?
Speak with a licensed agent by phone, or request your free quote online. Your dedicated agent will then walk you through your options.