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Whole life insurance

Are you looking for a comprehensive insurance policy that lasts a lifetime? Look no further than whole life insurance. In this article, we’ll explain what it is, how it works, and why it might be the right choice for you.

Whole life insurance is a permanent life insurance policy that covers your entire lifetime as long as premiums are paid. Unlike term life insurance, which only provides coverage for a specified term, whole life insurance offers lifelong protection. It also has a cash value component that grows over time, making it a flexible financial tool that can be used for various purposes.

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With its steady and predictable premiums, whole life insurance appeals to those who value stability and long-term financial planning. It offers peace of mind, knowing that your loved ones will be protected no matter what life throws at you.

This article will explore the advantages of whole life insurance, discuss different policy options, and help you decide whether it fits your needs. So, let’s dive in and discover the benefits of whole life insurance together.

What is Whole life insurance

what is whole life insurance policyWhole life insurance is a permanent life insurance policy that covers your entire lifetime as long as premiums are paid. Unlike term life insurance, which only provides coverage for a specified term, whole life insurance offers lifelong protection. It also has a cash value component that grows over time, making it a flexible financial tool that can be used for various purposes.

The main advantage of whole-life insurance is its lifelong coverage. This means your beneficiaries will receive a death benefit no matter when you pass away. Furthermore, whole life insurance policies also have a cash value component that grows over time. This cash value can be accessed through withdrawals or loans, providing you with a source of funds that can be used for emergencies, retirement, or other financial needs. Additionally, whole life insurance policies often have a guaranteed growth rate, ensuring that your policy’s cash value will increase steadily over time.

Whole life insurance policies also have a fixed premium, meaning that the amount you pay for your policy remains the same throughout your lifetime. This can be an attractive feature for those who value stability and prefer to have a predictable monthly expense. Furthermore, whole life insurance provides peace of mind, knowing that your loved ones will be protected financially even after you are gone.

KEY TAKEAWAYS

  • Whole life insurance plans cost more than term life but provide lots of benefits to the insured.
  • Polices within whole life insurance lasts for the entire life of the insured. The amount of the premium will not change, and coverage will not decrease.
  • It has a cash value that grows that is useful for various purposes like paying for the policy. 

Cost of whole life insurance

how much does whole life insurance cost a month

One of the common concerns when considering whole life insurance is the cost. Whole life insurance tends to have higher premiums compared to term life insurance. This is because whole life insurance provides lifelong coverage and has a cash value component that grows over time. However, it’s important to consider life insurance’s long-term benefits and financial security.

Various factors, including age, health, gender, and the coverage amount, determine the cost of whole life insurance. Younger individuals generally pay lower premiums, while older individuals and those with health issues may face higher premiums. It’s important to shop around and compare quotes from different insurance providers to find the best rates for your circumstances.

When considering the cost of straight life insurance, it’s important to consider its long-term financial benefits. The cash value component of an entire life insurance policy can be a valuable asset that grows over time. It can be used to supplement retirement income, fund education expenses, or provide a source of emergency funds. Additionally, whole life insurance offers a death benefit to your beneficiaries, ensuring financial security for your loved ones even after you are gone.

Whole life insurance rate 

The rate of a whole life insurance policy is the amount you pay in premiums to maintain your coverage. Due to the lifelong coverage and cash value component, whole life insurance premiums are generally higher than term life insurance premiums. However, the rate of a whole life insurance policy remains fixed throughout your lifetime, providing stability and predictability.

Several factors, including age, health condition, gender, and coverage amount, determine the rate of a whole life insurance policy. Younger individuals typically pay lower rates, as they are considered to be at lower risk of death. Additionally, individuals in good health generally pay lower rates than those with pre-existing medical conditions.

Insurance providers use actuarial tables and underwriting guidelines to assess the risk associated with insuring an individual and determine the appropriate rate. It’s important to note that once a whole life insurance policy is issued, the rate remains the same regardless of any changes in health or age. This can be advantageous, as your premium will stay the same as you get older or if you develop health issues.

When comparing whole life insurance rates, it’s essential to consider the policy’s long-term benefits and financial security. While the initial premium may be higher than term life insurance, the lifelong coverage and potential cash value growth can make whole life insurance a valuable investment in the long run.

whole life insurance rate chartTo help you find your best option, we’ve provided a whole life insurance rate chart

AGE

COVERAGE

COST

20

$100,000

$46.13

30

$100,000

$67.52

40

$100,000

$104.86

50

$100,000

$161.60

60

$100,000

$264.82

Sample rates calculated based on the health of non-smokers in Kentucky, with excellent health condition. Get your quote now to calculate your price.

Whole-life insurance riders and additional benefits

are whole life insurance policies worth itWhole life insurance policies often offer optional riders and additional benefits that can enhance coverage and provide additional financial protection. Here are some common riders and benefits to consider:  

 

  1. Accelerated death benefit rider: This rider allows you to access a portion of the death benefit if you are diagnosed with a terminal illness. The funds can cover medical expenses, long-term care, or other financial needs.
  2. Long-term care rider: This rider covers long-term care expenses, such as nursing home care or in-home assistance. It can protect your assets and provide financial security if you require extended care.
  3. Waiver of premium rider: With this rider, if you become disabled and are unable to work, the insurance company will waive your premium payments while keeping your policy in force. This ensures that your coverage remains intact even during periods of financial hardship.
  4. Paid-up additions: This benefit allows you to purchase additional coverage with the cash value in your policy. Paid-up additions increase your policy’s death benefit and cash value, providing additional financial protection and potential growth.
  5. Dividends: Some whole life insurance policies are eligible for dividends, a share of the company’s profits. Dividends can increase the cash value, purchase additional coverage, reduce premiums, or be received as cash.

It’s important to carefully review the terms and conditions of each rider or benefit before adding it to your whole life insurance policy. Consider your needs and financial goals to determine which riders or benefits suit you best. Working with an insurance professional can help you understand each option’s implications and benefits.

whole life insurance cash valueCash value in whole life insurance

One of the distinguishing features of whole life insurance is the cash value component. The cash value is a portion of your premium that accumulates over time and grows tax-deferred. It is a savings or investment element within the policy, providing various financial benefits and options.

The cash value in a whole life insurance policy grows through a combination of guaranteed interest and dividends, depending on the policy’s terms and the performance of the insurance company’s investment portfolio. The cash value is separate from the death benefit and can be accessed during your lifetime through withdrawals or policy loans.

The cash value of a whole life insurance policy can be used for various purposes. It can serve as an emergency fund, providing a source of funds in case of unexpected expenses or financial hardship. The cash value can also supplement retirement income, fund education expenses, or even purchase a home or start a business.

It’s important to note that accessing the cash value through withdrawals or loans reduces the policy’s death benefit. If the cash value is not repaid, it will be deducted from the death benefit when the policyholder dies. However, using the cash value can provide financial flexibility and options during your lifetime.

Factors to consider when choosing term or whole life insurance

Choosing the right whole life insurance policy requires careful consideration of various factors. Here are some key elements to keep in mind when selecting a policy:

  1. Coverage amount: Determine the coverage you need to provide financial security for your loved ones. Consider factors such as outstanding debts, future financial obligations, and income replacement needs.
  2. Premium affordability: Assess your budget and determine how much you can comfortably pay in premiums. Remember that whole life insurance premiums are fixed, so choose a policy that fits within your financial means.
  3. Cash value growth: Consider the policy’s potential for cash value growth. Look for policies with competitive cash value accumulation rates and a track record of consistent growth.
  4. Policy guarantees: Review the policy’s guarantees, such as the guaranteed death benefit and cash value growth rate. These guarantees ensure that your policy will provide the expected benefits regardless of market conditions. 
  5. Riders and additional benefits: Explore the optional riders and additional benefits offered by the insurance provider. Riders can enhance your policy by providing extra coverage, such as accelerated death benefits or long-term care coverage.  
  6. Financial strength of the insurance company: Research the insurance company’s financial rating and stability. Choose an insurance provider with a strong financial rating to ensure it can meet its obligations in the future.

Consider working with an experienced insurance agent or financial advisor to help you navigate the various options and choose the best whole life insurance policy for your specific needs and goals. They can provide guidance and help you understand the complexities of different policies, ensuring that you make an informed decision.

whole life insurance calculator

Whole-life insurance is the most common type of permanent life insurance.  Find out how much you really need to protect your loved ones!

Life Insurance Need Calculator
This calculator will help you to decide how much life insurance you need if your survivors invest the life insurance benefits they receive.

Funeral cost, estate taxes, etc. ($):
Amount needed to pay off non-mortgage debt ($):
Amount needed in emergency fund ($):
Amount needed in college fund ($):
Expected average annual living expenses ($):
Expected spouse's average annual income after taxes ($):
Annual Social Security Benefits ($):
Spouse's current age (#):
Value of current liquid assets ($ total of savings, investments, etc.):
Expected survivor's investment strategy:
Life insurance needs:

Whole life insurance vs term

whole life insurance vs termTwo of the oldest types of life insurance are term and whole life. Not that insurance companies haven’t tried to make it more complicated to reach a broader range of customers. Shopping for life insurance may be as much fun as sticking a needle in your eye, but they have this in common: The more deeply you delve, the more complex everything gets.

What’s the difference between term and whole life insurance, and which one is better for your needs? Hit the link above, and it will break down the key features that distinguish these insurance mainstays.

Best whole life insurance companies

Talk to an agent today about whole life insurance quotes

whole life insurance companies

#1 Foresters
#2 Assurity
#3 AIG
#4 Sagicor
#5 Americo
#6 Mutual of Omaha
#7 Kemper
#8 Transamerica
#9 Gerber

Whole life insurance quotes and premiums

Obtaining quotes and comparing premiums from different insurance providers is essential when considering whole life insurance. The cost of whole life insurance can vary significantly depending on the insurance company, age, health, and the coverage amount. Shopping around for quotes lets you find the best rates for your circumstances.

To obtain whole life insurance quotes, you will need to provide information about your age, gender, health condition, and the coverage amount you are seeking. Insurance providers will use this information to assess the risk of insuring you and determine the appropriate premium rate.

Consider the premium and the policy’s terms and benefits when comparing whole life insurance quotes. Look for insurance providers with a strong financial rating and a history of reliable policy performance. Additionally, consider each policy’s specific features and riders, as these can vary among insurance providers.

While the cost of whole life insurance may be higher than that of other types of insurance, it’s important to consider its long-term benefits and financial security. Whole life insurance offers lifelong coverage, a cash value component, and potential tax advantages. You can find a policy that suits your needs and budget by comparing quotes and premiums.

Common misconceptions about whole life insurance

Several things could be improved surrounding whole life insurance that can prevent individuals from considering it as a viable option. Let’s address some of the common misconceptions and provide clarification:

Misconception 1: Whole life insurance is too expensive. While it’s true that whole life insurance generally has higher premiums compared to term life insurance, it’s important to consider the long-term benefits and financial security it provides. Whole life insurance offers lifelong coverage and a cash value component that can be used for various purposes.

Misconception 2: The cash value in a whole life insurance policy is not accessible. It can be accessed through withdrawals or loans. While using the cash value reduces the death benefit, it provides a valuable source of funds that can be used for emergencies, retirement, or other financial needs.

Misconception 3: Term life insurance is always a better option. While term life insurance may be suitable for temporary coverage needs, such as income replacement during your working years, whole life insurance offers lifelong coverage and potential financial benefits. It can be a valuable tool for long-term financial planning and providing for your loved ones even after you are gone.

Misconception 4: Whole life insurance is only for the wealthy. It is available to individuals of all income levels. It can provide financial security and peace of mind to anyone who wants lifelong coverage and the potential for cash value growth.

Educating yourself about the features, benefits, and costs of whole life insurance is important to make an informed decision. Consider your circumstances, financial goals, and risk tolerance when evaluating whether your entire life insurance is right for you.

Conclusion: Is whole life insurance right for you?

Whole life insurance offers lifelong coverage, a cash value component, and potential tax advantages. It provides financial security and peace of mind, knowing your loved ones will be protected even after you are gone. While whole life insurance may have higher premiums compared to term life insurance, it offers a range of long-term benefits that can make it a valuable investment.

Assessing your needs, financial goals, and budget is important when considering whole life insurance. Determine the coverage amount that provides adequate financial security for your loved ones. Compare quotes and premiums from different insurance providers to find the best rates for your circumstances. Consider the potential for cash value growth and each policy’s additional benefits and riders.

Working with an experienced insurance agent or financial advisor can help you navigate the complexities of whole life insurance and make the best decision for your unique needs. They can provide guidance, answer your questions, and help you understand the implications and benefits of each option. With the right whole-life insurance policy, you can enjoy lifelong coverage and the peace of mind that comes with knowing your loved ones will be taken care of.

Frequently Asked Questions

What does a whole life insurance policy cover?

A whole life insurance policy provides lifetime coverage, ensuring that the policyholder's beneficiaries receive a death benefit whenever the policyholder passes away, provided premiums are paid. Additionally, whole life insurance includes a savings component known as the cash value, which grows over time at a guaranteed rate. The policy covers:

Death Benefit: A guaranteed sum paid to beneficiaries upon the policyholder's death.

Cash Value Accumulation: A portion of the premiums paid accumulates as cash value, which can be borrowed against or withdrawn by the policyholder during their lifetime.

Living Benefits: Some policies may offer additional benefits such as dividends (for participating policies), which can be used to reduce premiums, purchase extra coverage, or be taken as cash.

What are the two disadvantages of whole life insurance?

High Premiums: Whole life insurance typically has higher premiums than term life insurance. This is because it provides lifelong coverage and includes a cash value component. The higher cost can be prohibitive for some individuals, especially if they seek substantial coverage on a limited budget.

Complexity and Lower Returns: The cash value component of whole life insurance often grows slower than other investment options. While the cash value offers a guaranteed return, it is usually lower than the returns one might achieve through different investment vehicles like stocks or mutual funds. Additionally, the complexity of the policy can make it difficult for policyholders to understand all the terms and potential fees involved.

How much does a $100,000 whole life insurance policy cost?

The cost of a $100,000 whole life insurance policy varies based on several factors, including the policyholder's age, health, gender, lifestyle, and the specific insurance company. Here are some general examples:

Young, Healthy Individual (30-year-old, non-smoker): Premiums might range from $50 to $150 monthly.

Middle-Aged Individual (45-year-old, non-smoker): Premiums might range from $100 to $300 monthly.

Older Individual (60-year-old, non-smoker): Premiums might range from $300 to $700 monthly.

These are rough estimates, and actual costs can vary widely. To get an accurate quote, contacting insurance providers directly and providing detailed personal information for a precise assessment is recommended.

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