Whole Life Insurance
Whole life insurance provides permanent death benefit protection with guaranteed cash value accumulation, level premiums, and coverage that lasts your entire life.
Exam Tip
Whole life = permanent, guaranteed cash value, level premiums, lifetime coverage.
What is Whole Life Insurance?
Whole life is a type of permanent life insurance that covers you for your entire life, as long as premiums are paid. It includes a savings component (cash value) that grows at a guaranteed rate.
Key Characteristics
| Feature | Description |
|---|---|
| Coverage Period | Lifetime (to age 100/121) |
| Cash Value | Guaranteed growth |
| Premiums | Level (never increase) |
| Death Benefit | Guaranteed |
Cash Value Features
- Guaranteed growth - Minimum interest rate guaranteed
- Tax-deferred - No taxes on growth until withdrawal
- Loan access - Borrow against cash value
- Surrender value - Can cancel policy for cash value
Whole Life vs. Term
| Feature | Whole Life | Term |
|---|---|---|
| Duration | Lifetime | Temporary |
| Cash Value | Yes | No |
| Premiums | Higher but level | Lower but may increase |
| Flexibility | Less | More |
Uses of Whole Life
- Estate planning
- Wealth transfer
- Final expenses
- Forced savings
- Business succession
Study This Term In
Related Terms
Term Life Insurance
InsuranceTerm life insurance provides death benefit protection for a specific period (term), with no cash value accumulation, offering the lowest premium for the highest coverage.
Universal Life Insurance
InsuranceUniversal life insurance is a permanent life insurance policy with flexible premiums and death benefits, plus a cash value component that earns interest based on current market rates.
Cash Value
InsuranceCash value is the savings component of a permanent life insurance policy that grows tax-deferred and can be accessed through loans or withdrawals during the policyholder's lifetime.
Death Benefit
InsuranceA death benefit is the amount of money paid to beneficiaries upon the death of an insured person, typically the face amount of a life insurance policy.