What is whole life insurance and what are the benefits of buying a whole life insurance plan?
- Whole life insurance is the most common type of permanent insurance policy you can purchase today in the US*. In addition to providing cash benefits to your beneficiaries upon your death, the coverage provides a guaranteed cash value during the life of the policy. Part of each premium payment is applied to the policy’s cash-value account, which grows on a tax-deferred basis (based on current federal tax laws). The policyholder can withdraw the cash value as it accrues and use it as he or she sees fit.
- Because whole life insurance is a type of permanent life insurance, a whole life insurance policy provides life-long protection — as long as premiums are paid. Certain aspects of whole life insurance can make it an appealing choice over a term life insurance plan. With whole life insurance:
- Your premiums and death benefit are fixed.
- You can withdraw funds or take out a loan.
- You have a guaranteed rate of return.
- Whole life insurance can be a good choice by itself or combined with other types of coverage. For example, adding term life insurance when your family’s growing can provide a higher level of protection at an important time. Then, when the term policy expires, your whole life policy continues providing lifelong coverage.
- Either way, whole life is permanent financial protection, no matter how or when you die.