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Whole Life Insurance

Whole Life Insurance is the most common form of Permanent Life Insurance. Like all Permanent Life Insurance policies, a whole life policy will potentially cover you for the rest of your life — as long as you pay your premiums on time and in full.

Whole Life Insurance offers premiums that stay level throughout the life of the policy, as well as a fixed death benefit (the face value of the policy that you select).

Like other forms of Permanent Life Insurance (Universal Life Insurance and Variable Life Insurance, for example), the cash value of your policy reflects an accumulation of your premiums after allowances for company expenses and claims. Whole life policies usually guarantee that the cash value will accumulate at least at a minimum rate the carrier specifies.

While other types of Permanent Life Insurance may offer the potential for higher interest, Whole Life Insurance provides more predictable premiums than Universal Life Insurance and is not subject to market risk like Variable Life Insurance.

The cash value of the policy can be withdrawn or used as collateral you may borrow against for various uses while you are alive. It's important to note that loans or withdrawals will reduce the cash value and death benefit of your whole life policy and may require additional premium payments to keep the policy in force.

Because of the cash value component and the fact that the policy could be in effect for the rest of your life, Whole Life Insurance premiums are typically more expensive than Term Life Insurance premiums.

This chart helps to illustrate some of the primary differences between Term Life Insurance and Permanent Life Insurance policies.

Term vs Permanent Life Insurance
  Term Life Insurance Permanent Life Insurance
Policy Length Common term lengths are 10, 20, and 30 years1 The rest of your life as long as premiums are paid
Cash Value NO YES
Premium Structure Remain level or increase over time, depending on your policy Remain level through the life of the policy, or may be adjusted depending on the policy
Additional Considerations Doesn't accumulate cash value but is typically less expensive than Permanent Life Insurance Monthy premiums are typically more expensive since the policy can accumulate cash value and is priced to keep over a long period of time.

1Some carriers may allow for different term lengths, as low as 5 years or as high as 40 years, for example.

This is not a comprehensive overview of all relevant features and benefits. Carefully review all of the material details about these products before making a decision.

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