Whole Life Insurance
Whole Life Insurance — The solid foundation of a long-term financial strategy
Permanent insurance with level premiums plus access to the cash value.
How does it work?
Whole life is designed as cash value insurance, meaning the coverage and possibly the premiums last your entire life. Premiums are fixed and cannot be increased as you age and the death benefit is guaranteed as long as the premiums are paid. This can be a plus if you find you need life insurance later in life. Once you get older and if your health deteriorates, term life insurance can be very expensive or even impossible to purchase. But a whole life policy, while more expensive than term insurance early on, will maintain fixed costs regardless of your age or health.
How does it build cash value?
Part of your premiums pay for the life insurance with the rest going into the investment portion of the policy where it has the potential to accumulate cash value on a tax-deferred basis. Whole life investments tend to be on the conservative side, so investment returns may be relatively low. If you have the appropriate investment experience and risk tolerance, you can have more control over potential investment returns through a variable universal life insurance.
You may be able to borrow—generally tax-free—against your cash value and pay back the loan with interest. Any unpaid loan would be subtracted from the death benefit.
Take the next step
Because a whole life policy is designed to be kept for a lifetime, it’s important to work with a financially sound and highly rated insurance company. Work with a financial professional to see if whole life might be an effective insurance solution for you.