Last Updated: September 2020
Whole life insurance is a type of life insurance that does not expire. As long as you continue to pay your premiums, the policy is good your entire life, no matter how old you live.
We’ve helped 1000’s of people find affordable whole life insurance coverage, and below you’ll learn the details of whole life insurance.
We’ll cover how it works, the benefits of whole life insurance, the top whole life insurance companies, and more. We’ll answer any question you might have and help you decide if whole life insurance is right for you.
- What Is Whole Life Insurance Coverage?
- Whole Life Insurance vs Term Life Insurance
- The Advantages of Whole Life Insurance
- Sample Whole Life Insurance Rates
- The Best Whole Life Insurance Companies
- How Much Whole Life Insurance Do You Need?
- How to Find the Best Whole Life Insurance Policy
Life Insurance is Boring. Let’s Get To The Root Of It! Here are the key takeaways…
Whole life insurance costs more than term life insurance, but it has extra benefits & is permanent, covering you until you die. Whole life accumulates cash-value & you can withdraw funds tax-free. Calculate your debt, funeral expenses, & possible medical bills before choosing a policy, & compare rates with multiple carriers to ensure you find the lowest rates possible.
What Is Whole Life Insurance Coverage?
Whole life insurance is a form of permanent life insurance coverage. You’ll be covered from when you take the policy out until the day that you die.
The policy will also usually include a cash-value portion, meaning as you pay more premiums, the value grows.
You are often allowed to borrow against the cash value or use it as collateral for a loan. When you die, the funds are paid directly to your beneficiary and won’t form part of your estate.
At that time, the policy will pay out the face value of the policy and reabsorb the cash value.
There are usually a few different options when it comes to the death benefits for whole life insurance. These include:
- A straight death benefit
- An increasing death benefit
- A death benefit plus the return of your premiums
Your premium is set at the same rate that you took it out at, so it’s beneficial to take the policy out while you are young and healthy. This is one of the easiest ways to save money on life insurance.
Whole Life Insurance vs Term Life Insurance
Let’s have a look at some of the key differences between whole life and term life insurance to help you decide what different types of life insurance you can buy.
Whole Life Insurance Does Not Expire
With whole life coverage, you are insured until the day you die. As long as your premiums are kept up to date, you’ll be covered, whether you’re age 50 or 80.
Term life insurance ends at a certain age, or after a pre-determined number of years. At the end of the term, your coverage is terminated. If you die before then, your family gets the money.
This difference is an important distinction because if you decide that you want to be reinsured when the term expires, you’ll pay more for coverage.
Whole Life Insurance is More Expensive
Whole life insurance costs a lot more than term life, because there is a cash value embedded in the plan, and the length of the coverage is unlimited.
You could be paying the same premium for the next twenty or thirty years. As a result, the insurer can’t increase the premiums to match market values over time.
Cost is one of the most crucial factors you should consider as you select a life insurance plan, weighing the value of the policy against the cost.
The Advantages of Whole Life Insurance
In most cases, you’ll find that term life insurance is a better fit in terms of affordability and coverage, but there are some benefits to whole life insurance.
Let’s take a look.
Whole Life Insurance Accumulates Cash Value
The main advantage of whole life insurance is that it accumulates a cash value. This means the policy will quickly become an asset.
Over time, this cash value grows as interest is added. Better still, the interest is tax-free, just as it would be in an IRA.
Understanding the Cash Value of Your Whole Life Policy
The fact that whole life insurance accumulates a cash value is a big plus, but it needs to be adequately understood.
The benefits of this include:
- Your investment is protected from market fluctuations.
- The interest is tax-free, and there are no limitations on contributions.
- You might even earn dividends on the cash value.
- It’s a living benefit for you. If you need emergency access to the money, you can get a loan.
- If there are paid-up payment additions, these will be paid to your beneficiaries in addition to the face value.
You Can Withdraw Funds Tax-Free
You are also able to withdraw the funds from the policy tax-free, provided that the amount withdrawn is less than the amount you’ve paid in premiums. Anything over and above that amount is taxable.
You Can Use the Whole Life Insurance Policy as Collateral
It sounds great, but there are terms and conditions attached to withdrawing the funds. Some companies will treat this as a surrender of the policy.
If that happens, it’s all taxable. The amount that your beneficiaries get paid out, in the end, is also affected.
That said, if you need money in a hurry for an emergency, it is a great option.
Also, if you’re no longer able to work, the premiums can be paid from the cash portion. This means less of a payout in the end, but also that your coverage continues whether you’re working or not.
The Death Benefit Can Protect Your Family
The death benefit can be paid directly to your beneficiary. This saves on the death duties to be paid and can help ease the financial burden incurred by your passing.
If you do have any loans against the policy, the person holding the policy will be entitled to a portion of the payout to settle the loans. Anything that is left over is for your family.
You might also get into a position where the interest you’re earning is more than the premiums you pay. If this is the case, your policy will be moved into a paid-up status. You can then choose to continue paying into it or stop.
Stopping your premiums or drawing on the cash value will affect the payout your family receives.
Sample Whole Life Insurance Rates
Age, gender, health, and lifestyle choices such as smoking, will all play a factor in determining the cost of life insurance.
Here are sample rates for a variety of whole life policies.
Whole Life Insurance Quotes
The quotes below are for monthly rates for males and females who are average height and weight for their age, and who are in the preferred risk class, meaning, they are very healthy and have no family background of medical conditions, or past serious medical conditions.
| Age | Male $100,000 | Female $100,000 | Male $500,000 | Female $500,000 |
|---|---|---|---|---|
| 25 | $72 | $64 | $152 | $128 |
| 30 | $72 | $64 | $160 | $136 |
| 35 | $72 | $64 | $176 | $152 |
| 40 | $88 | $80 | $248 | $216 |
| 45 | $136 | $112 | $416 | $328 |
| 50 | $209 | $165 | $682 | $484 |
As you can see, whole life insurance rates increase dramatically as you get older. This is why it is recommended that you secure rates at an early age.
Whole Life Insurance Quotes for Smokers
Smokers regularly experience 2 to 5 times higher life insurance rates than non-smokers. Because of this, it is essential to find good rates for smokers more than for others. Here are some sample monthly rates for smokers.
| Age | Male $100,000 | Female $100,000 | Male $500,000 | Female $500,000 |
|---|---|---|---|---|
| 25 | $152 | $120 | $528 | $432 |
| 30 | $160 | $136 | $576 | $464 |
| 35 | $208 | $176 | $704 | $584 |
| 40 | $296 | $264 | $1,064 | $840 |
| 45 | $424 | $352 | $1,672 | $1,304 |
| 50 | $660 | $550 | $2,783 | $2,156 |
Whole Life Insurance Quotes for Diabetics
Diabetics who actively manage their diabetes and maintain an otherwise healthy lifestyle can experience affordable life insurance coverage. Those whose condition is worse can expect higher rates. Here are some sample monthly rates for diabetics.
| Age | Male $100,000 | Female $100,000 | Male $500,000 | Female $500,000 |
|---|---|---|---|---|
| 25 | $200 | $176 | $544 | $472 |
| 30 | $216 | $200 | $632 | $544 |
| 35 | $232 | $200 | $856 | $664 |
| 40 | $272 | $232 | $840 | $648 |
| 45 | $392 | $304 | $1,386 | $1,012 |
| 50 | $550 | $418 | $2,189 | $1,507 |
The Best Whole Life Insurance Companies
If you are looking for whole life insurance, choosing the right company is one of the most important decisions you’ll make. We always recommend finding quotes from multiple carriers to compare and see which policy makes the most sense.
These five companies typically have great rates, service, and policy benefits on whole life insurance.
- Penn Mutual – Best for cash value accumulation.
- Mutual of Omaha – Best for children’s whole life.
- MassMutual Life Insurance – Best for dividends.
- Northwestern Mutual Life Insurance Company – Best for business owned whole life.
- Foresters – Best for final expense whole life insurance.
All five of those carriers have strong financial ratings, customer service, and some of the lowest rates for most people purchasing whole life insurance.
How Much Whole Life Insurance Do You Need?
When it comes to getting just the right amount of insurance, there is a lot to consider.
You want to ensure, at the very least, that your family is left in a stable financial situation after you die. You don’t want them to be overburdened with debt or having to sell the family home.
At the same time, the higher the face value, the more you can expect to have to pay for your coverage. So, how do you work out how much life insurance you need?
There are a few factors to take into consideration:
- The amount of debt you have. You should consider at least ensuring that you cover your existing debt.
- The cost of the funeral.
- The cost of medical bills that might accrue while you’re still alive.
- What your spouse will do for money after you’ve gone. In this respect, term life would probably be a cheaper way to provide a replacement income, but it is something to keep in mind.
- Any business expenses that you may have.
- Any legacies that you’d like to leave. Maybe you want to have enough to pay for all your debt and also a college fund for your granddaughter for example.
You Can Split Payments Between Whole Life Insurance and Term Life
An alternative to purchasing one whole life policy is buying both whole and term life insurance. This is a great way to save on premiums and still provide the coverage you need.
For example, if you need $200,000 in coverage, you don’t have to buy a $200,000 whole life insurance policy. You could, but it would be expensive.
Instead, you can take out $50,000 as whole life coverage and $150,000 as term coverage.
That way you can pay less overall, and still enjoy some permanent benefits. You can get your whole life insurance rate while you’re younger, and so you pay less over time.
How to Find the Best Whole Life Insurance Policy
There are a lot of factors to consider as you shop for whole life insurance. There is no perfect life insurance policy for every need that you have.
By doing your research and understanding how different policies work, though, you can come much closer to finding the perfect policy for you.
- Always compare quotes from multiple carriers.
- Work with an independent agent to ensure you’re actually getting the best policy for your needs. Independent agents give you access to numerous life insurance companies at no cost to you.
You can contact us or use our quote tool to help find your best life insurance policy. You’ll get quick, free quotes from the best whole life insurance companies today.
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