Whole Life Insurance

Whole Life Is Permanent Life Insurance: As the name implies, instead of having a policy that only covers you for a specific number of years—a Whole Life policy covers you for…your whole life.

For the same death benefit as a Term Life policy, you will  have higher premiums. Part of the premium gets credited to the death benefit and the other part (minus any potential fees) gets credited to your cash value.

But, with a Whole Life policy you are guaranteed to leave a death benefit to your heirs regardless of when you die and how long you live…something a Term Life policy can’t do!

Those Whole Life naysayers out there that tell you to “buy term and invest the difference” don’t take into account a situation where while you are younger you become disabled or develop a health issue and lose your earning ability and therefore can’t save and invest as much for retirement. Then after your term life policy is up—what happens if your family still has a need and benefit from life insurance and because of your disability and/or health issue…you can’t get one? Then what? Ask that to the naysayers. 

Whereas, if you had a purchased a Whole Life policy prior to any disability or health issue, you’ll have life insurance for the rest of your life…regardless of your health issue or disability.

In a way, you could consider your Whole Life insurance policy as a bond which matures upon your death…and pays interest each and every year until then. 

When you die, your heirs get the guaranteed return of “capital” that you invested into the policy. So, the older you get, the more value the policy is to your heirs!

Benefits of Whole Life Insurance

• Simple to understand...most vanilla type of permanent life insurance there is (especially as compared to the different Universal Life policies).
• Guaranteed Death Benefit to heirs: See the Life Insurance page for more info.
• Guaranteed Fixed Premium: The same, guaranteed fixed premium for the rest of your life!
• Tax-free growth on investments.
• Dividend earning potential…especially when purchased through a mutual company.
• Cash Value: Accumulates a liquid, supplemental savings. 
• Leverage: Because of the Cash Value, you have leverage when it comes to using it for other things. You can take a policy loan to:
  • Buy real estate investments while still accumulating interest growth.
  • Create an income stream in retirement. Income stream could potentially be tax-free depending on whether you take it as a policy loan or you withdraw non-interest and dividend earned proceeds.
  • Pay off debt.
  • Remodel your home.
  • Always be careful with taking policy loans.
• No limit on contribution amount like an IRA or 401(k).
• Guaranteed minimum performance.
• Growth can be cashed in at any point with no tax consequences.
• Flexibility later
• Financial security for your family.
• No hidden fees or unseen and untold complexities as compared to the Universal Life policies. 
• It’s been around for centuries and isn’t going anywhere.