Whole Life Insurance

What is whole life insurance?

Whole life insurance is a type of permanent life insurance, meaning it lasts your entire life and has a savings component built in that grows cash value over time. Whole life insurance is a popular and risk-averse type of permanent life insurance. The cash value grows at a guaranteed rate of return, and your premium is locked in for life as long as you keep up with payments.

How does whole life insurance work?

Once you've selected the type and amount of coverage, your life insurance company will split the premium — one part goes into a cash value account, and the rest covers the cost of your policy.

Over time, your cash value will grow, and you'll have the option to borrow from it in the form of a life insurance loan. You could even withdraw funds to supplement your retirement income.

When you pass away, your death benefit amount will be paid out tax-free to your beneficiaries. Your cash value won't be added to their payout, so it may be worth using that extra cash while you're still alive. Learn about the tax implications of life insurance funds.

What are the benefits of whole life insurance?

Whole life insurance offers benefits that term life insurance doesn't, like lifelong coverage and a savings component. And compared to universal life insurance, whole life is more affordable and has a fixed cash value growth rate.

Lifetime coverage

Guaranteed cash value growth

Stable premium

How does whole life insurance differ from term life insurance?

Whole life insurance

  • Coverage lasts your entire life
  • Cash value component that grows at a fixed rate
  • More expensive
  • Requires medical exam

Term life insurance

  • Coverage is temporary (a set number of years)
  • No cash value component
  • Less expensive
  • No-medical-exam options

Still wondering which is right for you? Learn more about term vs. whole life insurance.

Commonly asked questions about whole life insurance

How much does whole life insurance cost?

How long does it take for whole life insurance to build cash value?

How long do you have to have whole life insurance before it pays?

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