Whole Life Insurance 101

July 5, 2017

What is Whole Life Insurance?

Whole life insurance is a contract that provides lifelong protection. As long as the insurer continues to pay their premiums consistently, typical policies feature fixed premiums, fixed and guaranteed death benefits and guaranteed cash value. Whole life insurance finances a lot more than you’d expect—including funeral expenses, payment for outstanding debts, income for your family and college tuition for your children.

What are the Benefits?

There are countless benefits of whole life insurance. A permanent policy allows you to have a fixed and known premium. You will also have tax-free cash value interest, tax-free death benefits, the option to borrow from your cash value or surrender your policy in return for a portion of the cash value and the opportunity to earn dividends.

What to Look for in a Policy

Not all policies are created equally and each individual is different, so the amount of coverage you require will be unique to your needs. Consider your family’s life stage and factors—like if you have aging parents, or if you have a child with special needs—to figure out what coverage you need.

Although cash values of whole life policies have a guaranteed growth rate, some policies perform better than others. Make sure you educate yourself on insurer’s rates and their projected growth. You can add extra features to your policy with riders that provide extra protection and coverage should you become ill or disabled.