Life insurance guide
Whole life insurance
Whole life insurance covers you for your entire life as long as premiums are paid, and the premium never increases. Part of each premium builds cash value at a guaranteed rate that you can borrow against while you're alive.
What it is
Whole life is permanent coverage. Unlike term, it never expires, and it includes cash value that grows at a guaranteed rate.
Your premium is fixed. Part of it pays for the death benefit; the rest builds cash value you can borrow against or withdraw during your lifetime.
Many mutual insurance companies also pay dividends to whole life policyholders. Dividends aren't guaranteed, but they can reduce premiums, increase coverage or add to the cash value.
How it works
How the cash value works.
Guaranteed growth
Cash value grows at a guaranteed rate, so it builds predictably over time.
Tax-deferred
Growth isn't taxed while it stays in the policy.
Policy loans
Borrow against the cash value for an emergency, an opportunity or retirement income.
Dividends
Mutual companies may pay dividends that add to the policy's value.
Who it suits
Who it suits.
Lifelong needs
A dependent who will always need support, or costs that come whenever you die rather than within a set period.
Estate liquidity
Cash for estate taxes, debts and settlement costs without forcing the sale of property or a business.
Passing on wealth
A death benefit that is generally income tax-free and paid to beneficiaries outside probate.
Business succession
Funding for buy-sell agreements, so a partner's share can be bought out smoothly.
Estate planning
Whole life and an irrevocable trust.
A whole life policy owned by an irrevocable life insurance trust (ILIT) keeps the death benefit out of your taxable estate, so more of it reaches your beneficiaries. We work alongside your attorney when a trust is part of the plan.
Cost
What decides the price.
Whole life costs more than term for the same death benefit, because it lasts for life and builds guaranteed cash value. Your premium depends on your age and health when you buy, the amount of coverage and how you choose to pay, for life or over a shorter period.
We show you the guaranteed values and, separately, the values that depend on dividends, so you know which numbers are promised.
Coverage and pricing depend on underwriting, eligibility, state availability, and carrier approval.
Compare
Whole life next to the other types.
| Topic | Whole life | Term life | Indexed universal life |
|---|---|---|---|
| How long it lasts | Lifetime | 10 to 30 years | Lifetime |
| Premium | Fixed | Fixed | Flexible |
| Cash value growth | Guaranteed | None | Linked to an index |
| Dividends | Possible | No | No |
| Best for | Estate planning | Needs that end | Growth potential |
Questions and answers
What people ask us.
Is whole life better than term?
Neither is better; they do different jobs. Term covers needs that end, like the mortgage years. Whole life covers needs that last for life and builds guaranteed cash value. Many plans use both.
Can I get money out of a whole life policy?
Yes. You can borrow against the cash value or withdraw from it. Loans and withdrawals that aren't repaid reduce the death benefit, so we plan how and when you'd use them.
Are dividends guaranteed?
No. Mutual companies may pay them, and many have long histories of doing so, but they are not promised. The guaranteed cash value is.
Related guides
Read next.
Life insurance overview
The main types side by side, and the job each one is designed to do.
Read the guideIndexed universal life
Permanent coverage with flexible premiums and growth linked to a market index.
Read the guideFinal expense
A smaller whole life policy for funeral costs and last bills, usually with no medical exam.
Read the guideSee the numbers at your age.
Coverage that lasts for life, with guaranteed and dividend values shown separately. Thirty minutes, no obligation.
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