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How Does Whole Life Insurance Work?

Whole life insurance is a type of permanent life insurance that remains in effect for the entirety of the policyholder's life. Although whole life insurance policies are generally more expensive than term life policies, they can be beneficial to people who want to diversify their investment portfolio, leave an inheritance to their loved ones, or are planning their estate.

Whole Life Insurance Frequently Asked Questions

How does whole life insurance differ from term life insurance?

As mentioned, whole life insurance policies are permanent, meaning they don't expire after a certain period of time as long as the premiums are paid. Term life insurance policies are temporary and only pay out a death benefit to the beneficiary if the policyholder dies within the term of the policy. Typically, a term is between five and 30 years. 

If the policyholder outlives the term of their policy and decides they want to renew it, the monthly premium will likely increase. Whole life insurance generally guarantees a fixed premium.

Whole life policies also tend to be more expensive than term life policies because they contain an investment component that generates cash value.

What are common types of permanent life insurance?

Whole life is one type of permanent life insurance. Other types of permanent life insurance include:

  • Universal life insurance — offers adjustable death benefits, premiums and cash value. These policies are typically more flexible than whole life policies.
  • Variable life insurance — splits your premium payments into a cash value portion and an investment portfolio. Tying your policy to stocks, bonds, and money markets may yield a higher policy total with the right investments.  

To learn more about your life insurance options, speak to a licensed agent at 1-800-966-7169 or read through our guides below.


*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.

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