What is Whole Life Insurance?
Whole life insurance is a type of permanent life insurance policy that provides coverage for the entirety of the policyholder's life, as long as premiums are paid on time. These policies build cash value over time that the policyholder can borrow against. Whole life insurance is different from term life insurance, which only provides temporary coverage. Learn more
When applying for a whole life policy, the policyholder agrees to regularly pay premiums to the insurance company in exchange for a guaranteed death benefit payout to their chosen beneficiary upon their passing. The initial premium amount is based on personal factors like age, gender, and health status. A key benefit of whole life is that premiums remain fixed over the life of the policy regardless of health or age changes. Read more
Whole life policies remain active until the insured dies or decides to surrender their policy. Unlike term life, whole life policies do not expire after a set period. The main appeal of whole life is having permanent death benefit protection. Find out more
How Cash Value Works
A unique feature of whole life insurance is it builds cash value that the policyholder can utilize. Cash value accumulates over time as premium payments are made. The longer one pays policy premiums, the more cash value is available to them. Discover more
If an unexpected expense arises, the policyholder can take out a loan against their policy's cash value. This provides access to funds without needing to liquidate assets or withdraw from savings. Policy loans can be used for any purpose. As long as the loan balance is repaid before the insured’s death, the full death benefit will be paid to beneficiaries. If left unpaid, remaining loan balances get subtracted from the death benefit amount. Get more details
Is Whole Life Insurance an Investment?
While whole life insurance shares some similarities with investment products, it should not be purchased as an investment. Investments have protections and regulations that insurance policies lack. The primary purpose of life insurance is providing financial protection to dependents and beneficiaries after the insured’s passing. Learn more
However, the cash value element may be useful for supplementing retirement savings or leaving an inheritance. Still, dedicated investment vehicles tend to offer greater growth potential and liquidity compared to whole life insurance cash values. Read more
What Does Whole Life Insurance Cover?
A whole life insurance policy will pay out a lump sum death benefit to the insured's designated beneficiaries upon their death, whenever that may occur. This can provide funds to cover final expenses or help replace lost income for surviving dependents. Payout amounts are defined when initially purchasing the policy. Find out more
Costs and Premium Factors
Whole life insurance premiums are notably higher than term life insurance since permanent, lifelong coverage is substantially more expensive to provide. Here are some sample whole life policy premiums based on age, death benefit amount, and gender:
Whole Life Sample Premiums - Male
| Age | $25,000 Policy | $50,000 Policy | $100,000 Policy |
|---|---|---|---|
| 50 | $65/mo | $116/mo | $217/mo |
| 55 | $80/mo | $144/mo | $276/mo |
| 60 | $102/mo | $182/mo | $350/mo |
| 65 | $130/mo | $234/mo | $454/mo |
| 70 | $174/mo | $314/mo | $611/mo |
| 75 | $237/mo | $429/mo | $840/mo |
| Age | $250,000 Policy | $500,000 Policy | $1,000,000 Policy |
|---|---|---|---|
| 50 | $531/mo | $1,057/mo | $2,101/mo |
| 55 | $678/mo | $1,351/mo | $2,688/mo |
| 60 | $865/mo | $1,725/mo | $3,436/mo |
| 65 | $1,123/mo | $2,241/mo | $4,468/mo |
| 70 | $1,518/mo | $3,031/mo | $6,047/mo |
| 75 | $2,090/mo | $4,176/mo | $8,337/mo |
Whole Life Sample Premiums - Female
| Age | $25,000 Policy | $50,000 Policy | $100,000 Policy |
|---|---|---|---|
| 50 | $52/mo | $92/mo | $173/mo |
| 55 | $65/mo | $117/mo | $222/mo |
| 60 | $82/mo | $149/mo | $287/mo |
| 65 | $107/mo | $196/mo | $378/mo |
| 70 | $143/mo | $264/mo | $514/mo |
| 75 | $199/mo | $370/mo | $725/mo |
| Age | $250,000 Policy | $500,000 Policy | $1,000,000 Policy |
|---|---|---|---|
| 50 | $421/mo | $837/mo | $1,661/mo |
| 55 | $544/mo | $1,084/mo | $2,153/mo |
| 60 | $705/mo | $1,406/mo | $2,799/mo |
| 65 | $935/mo | $1,865/mo | $3,717/mo |
| 70 | $1,274/mo | $2,544/mo | $5,074/mo |
| 75 | $1,802/mo | $3,599/mo | $7,184/mo |
In summary, whole life insurance provides permanent death benefit coverage in exchange for fixed premium payments over the insured's lifetime. It also builds cash value that can be borrowed against if needed. While not an investment vehicle, whole life can be part of a sound financial plan.
