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How to Define Whole Life Insurance

Whole life insurance is a form of permanent life insurance. Unlike term life insurance policies, which expire after a certain amount of time, whole life insurance policies remain in effect for the policyholder's entire life, as long as the premiums are paid on time and in full.

Whole life insurance policies also accumulate cash value over time. Policyholders may be able to borrow money against the value of their policies, and may be able to secure dividend payments from their policies.

Types of Whole Life Policies

As you define whole life insurance, it’s important to note the different types of whole life policies available.

  • In a participating whole life policy, your insurance company will share excess profits with you, via dividend payments
  • In a non-participating whole life policy, there are no shared profit benefits. The value of the policy is determined when it is written
  • An indeterminate premium policy resembles a non-participating policy, except that the annual premiums can be variable
  • A limited pay policy may only require that you pay premiums for a limited number of years, after which the policy will continue to pay benefits throughout your lifetime

Uses

Whole life insurance policies can be used any way the beneficiary chooses. Some common uses for whole life insurance payouts include coverage for:

  • Funeral and burial costs
  • Medical bills
  • Day-to-day living expenses and bills
  • Mortgage payments
  • Education expenses

Costs

Whole life insurance policies often come with more expensive premiums than term life policies. For men and women aged 40, for example, the annual premiums could hover around $3,500 and 3,000, respectively (actual costs will vary). 

However, you should consider several other factors that define whole life insurance policies:

  • Whole life insurance premiums generally remain the same throughout your life
  • The cash value of the policy will likely grow at a guaranteed rate
  • You will have a guaranteed death benefit, unlike term plans, which will only pay out benefits if you die while the policy is in force 

Call a Licensed Life Insurance Agent

A licensed agent can help you determine your life insurance needs. Get in touch by calling 1-855-303-4640. 

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Applications for life insurance may be subject to acceptance by insurer. Issuance of the policy may depend upon answers to health questions. Rates and coverage amounts depend upon the carrier selected. Your policy may be subject to underwriting approval. You will receive only the benefit amount in the policy issued.

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