Whole Life Insurance

This permanent life insurance can provide lifelong coverage. It provides a financial component you won't receive in a term-life policy; however, it is typically more expensive; whole life insurance combines an investment account called "cash value" and an insurance product. If you pay the premiums, your beneficiaries can claim the policy's death benefit when you pass away. Whole life insurance offers coverage for the rest of your life and includes a cash value component that lets you tap into it while alive. Like a 401(k) or IRA, the money in the cash value account grows tax-free. However, if you take out cash value that includes investment gains, that portion will be taxable. Whole Life offers three guarantees: a minimum rate of return on the cash value, the promise that your premium payments won't go up, and a guaranteed death benefit amount.

The value of cash value

Another valuable benefit of whole life insurance is what’s known as a “cash value.” The cash value portion of a whole life policy takes a part of your premiums and lets it grow at an attractive rate of return. You can borrow from the cash value during your lifetime for any reason you choose.3 This makes a whole life policy great for those who have maxed out their tax-advantaged retirement savings plans.

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The financial considerations of whole life

We’ll be honest—because of the benefits it offers, whole life insurance usually comes with larger premiums than term life. For most families, buying enough whole life insurance to fully meet their protection needs would be outside their budget. But getting a whole life policy and blending it with term life insurance can help you protect your loved ones throughout the different stages of your life.

Reasons to consider whole life insurance:

• Coverage is guaranteed to never expire
• Premiums are guaranteed to never increase
• Cash value will grow over time
• Guaranteed tax-free death benefit
• The ability to borrow from the policy’s cash value while you’re alive
• A variety of premium payment schedules

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