Whole Life Insurance | Is Permanent Perfect For You?

Written by Jeff Root

Whole life insurance is one of two types of life insurance. It was the single most popular types of life insurance from the 1950’s thru the 1970’s.

Now with all the different options for life insurance, it remains one of the most straightforward policies available.

In this article, we will cover: 

  • The types of whole life insurance
  • How whole life insurance compares to term life insurance
  • Is whole life insurance right for you?
  • Rates for whole life insurance compared with term life insurance
  • Tips to find the best whole life insurance for you

 

What is Whole Life Insurance?

Whole life insurance is one type of life insurance under the umbrella of permanent life insurance.

Permanent life insurance lasts for your entire life. Term life insurance only lasts for a set number of years, or term.

Whole life insurance is the most straightforward type of permanent life insurance. It stays with you throughout your life.

Some policies mature at age 100 or 121. Whole life also comes with a cash value accumulation component.

This cash value accumulation can be a little confusing at first but is fairly straightforward. As you pay your premiums, those count toward the cash value of the policy. As those premiums build and compound, you get a growing cash value.

Essentially, the life insurance company is taking those premiums, reinvesting them and allowing you to borrow against the growing value. The best part is that this growth is tax-deferred.

What Else Does a Whole Life Insurance Policy Have to Offer?

Some whole life policies offer dividends on top of the cash value accumulation. Make sure to check whether dividends are guaranteed.

Not every company guarantees them. You can use the dividends to add to the cash value accumulation. Alternatively, you can receive them in cash, increase the death benefit on your policy, or reduce your premiums.

Most companies also offer riders on the policy. These extra features customize the policy. For example, you might add a disability waiver of premium rider.

That would mean you don’t have to pay your premiums if you become disabled. Another common rider is chronic illness. That allows you to access your death benefits if you are diagnosed with certain diseases.

Who is Whole Life Insurance Right For?

In short, whole life insurance is right for you if you fit one of the following:

  • Disposable income
  • Own a large number of assets or an estate
  • Plan on building an estate
  • Looking for investment opportunities and growth with life insurance coverage
  • Looking for alternative ways to invest in your retirement
  • Want to pass on your life insurance coverage to beneficiaries

The type of life insurance you buy all boils down to why you’re buying it. Whole life insurance is for people who plan on using life insurance at the end of their life.

It could be to pay for their funeral and other final expenses. It could be a gift for a spouse or children. Some people use it for charitable donations.

Whole life is best for people with a little wiggle room in their income.

If you are strapped for cash every single month, it may be unwise to buy a whole life policy in case a time comes where you can’t pay the premium and have to let it lapse.

Universal life policies are somewhat more flexible in premium payments.

Whole Life vs. Term Life Insurance

In short, term life insurance is best for people who fit the following:

  • People who have young children
  • Have life insurance through their work, and want to supplement coverage
  • People who cannot afford whole life coverage
  • Have a retirement plan already in place
  • Only need coverage to a specific age
  • Do not have as many assets or debts to protect

Whole life insurance and term life insurance exist for two entirely different reasons. Whole life is meant as coverage that will always be there.

No matter when you pass away, the insurance company will come through with a check for your family.

Term life insurance, on the other hand, is more of a safety net to get your family through certain times in your life.

Most people looking at term life will take out a 20-year policy to provide for their minor children and spouse in the event of their untimely death. It’s a just-in-case peace of mind.

Other people will take out term policies to cover their mortgage or other large outstanding debts that they are financially responsible for. Again, it’s a peace of mind policy that would allow their spouse to keep living in the house in case anything happened.

Term life insurance is cheaper. It ends. If the insurance company can collect premiums without having to pay out a death benefit, they can charge less. Whole life, conversely, is guaranteed to pay out at some point. The insurance company must charge more.

Sample Rates

The monthly sample rates below reflect men and women in good health seeking a $250,000 benefit. Your rates may vary depending on your exact age, benefit amount, and your health.

Age Male Female
35 $276.86 $239.93
40 $341.21 $292.21
45 $421.27 $365.27
50 $525.39 $453.43
55 $663.86 $580.08
60 $837.59 $700.57
65 $1,076.63 $895.88

How Long Do You Have to Pay for a Whole Life Policy?

Premiums on whole life policies are level. They stay the same for your entire life.

To keep the policy in force, you must pay the premium every month. Some policies allow annual premium payments. Paying annually can cost less overall than monthly payments. (It cuts down the processing fees for the insurance company.)Every once in a while, you can also find a single payment policy. These require one large upfront payment. Then you’re finished. You have a paid in full whole life policy.

If you are looking for a policy that allows flexible payments, then a variable life insurance policy may be best for you.

Is It A Good Investment?

It is against the rules to market life insurance as an investment. So let’s make one thing clear. Life insurance is not an investment.

Life insurance is a way to protect your family. It passes on money (tax-free) to your family. If you have a life insurance policy at the time of your death, your family will receive money. They will not have to wait for your will to get sorted out as long as you don’t name your estate as the beneficiary. If you can’t seem to save money, but can pay your bills on time, then life insurance can be a way to leave something to your heirs. It could be money they might otherwise not get.

Whole life insurance can also provide a way to get you through lean times. You can borrow against the cash value accumulation. It’s a no questions asked loan. As a bonus, rates are often lower than what you would get at a bank.

Whether or not you need life insurance is a different matter. If you have financial dependents, it is a kind thing to set up for them. If you want to ensure that your end of life expenses get covered, and you have something left over to give to your adult children, that’s a thoughtful gesture too.

Best Whole Life Insurance Companies

While there are dozens of companies out there offering whole life policies, our favorites come down to three.

We determined these based on the company’s financial strength, customer service, and benefits offered.

Company Whole Life Coverage A.M.Best Customer Reviews
Assurity
  • Simplified issue
  • Fully underwritten
  • Single premium
A- 4.0 / 5
Foresters
  • Universal life
  • Variable life
  • Single premium
  • Final expense insurance
A 4.1 / 5
Ohio National
  • Limited pay whole life
  • Dividend and market growth policies
  • Rate payment options
A+ 3.9 / 5
Transamerica
  • Final expense insurance
  • Variable universal life
  • Universal life
  • Indexed universal life
  • Group whole life
A+ 4.0 / 5
SBLI
  • Single premium whole life
  • Limited pay whole life
A- 4.1 / 5

Assurity

Assurity is a solid company meriting an A- from A.M. Best for financial strength. Their products are simple. No gimmicks. With a little time and patience, anybody can read and understand an Assurity life insurance policy.

Their pricing is competitive with other whole life policies. And sticking with the simple (which is one of the things they do best) they don’t overwhelm you with different whole life products.

Assurity is best known for their affordable accelerated underwriting term and whole life insurance policies. Offering some of the most affordable burial and final expense life insurance on the market.

Foresters

Forester’s just edges out Assurity on their financial strength with a solid A from A.M. Best. What we love about Forester’s is that they offer a 20 pay option.

You can pay premiums for 20 years instead of for life. They also have no exam policies which sweetens the deal for people who can’t handle needles.

Foresters also offers a number of both universal and variable life insurance options as well, which are both affordable and offer great coverage.

Ohio National

Finally, Ohio National shows remarkable financial stability and fiscal responsibility with an A+ from A.M. Best. They offer four different whole life policies, giving you options to pick the one best suited to your needs.

There are many other companies out there offering whole life policies. While these three are great picks for many people, your circumstances may be different. If another company is better for you, don’t worry. Check their financial strength. Anything in the A category is about as safe as you can get.

Ohio’s whole life insurance policies are best known for their fast cash value accumulation, due to the way they structure their premiums.

Transamerica

Transamerica is another highly regarded life insurance company, that has been around for over 100 years.

They offer a wide variety of whole life insurance policies such as final expense, variable, universal, and group whole life insurance policies. Not only do they offer a large variety of policies that regularly experience great returns, they also have some of the lowest whole life insurance rates on the market.

Transamerica is also known for their affordable term life insurance and whole life insurance for smokers.

SBLI

SBLI has also been around for over 100 years.  They are a very highly regarded company, financially speaking.

Their whole life insurance coverage may not be as wide in terms of variety as the other companies on our list, but that does not stop SBLI from providing some of the best whole life insurance protection available, at very good rates.

SBLI also has very good life insurance rates for smokers and people in lower health classes.

Finding The Best Whole Life Policy

The best way is to be upfront with an independent life insurance agent. This comes as a two-step strategy to make sure you pick the best company for your needs.

First, independent life insurance agents work with multiple companies. They aren’t stuck with just one. This is the critical factor in finding the best policy because it allows you to compare quotes side by side.

Each company rates people slightly differently. Some companies offer better rates for women. Other companies offer better rates to older people compared to their competition. But the big factor is health.

You want to be honest about your health because lying in the life insurance application process is insurance fraud, which is a federally punishable crime.  It also can cause you to be denied coverage, or for your coverage to become void if you die during the life of your policy.

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About Best Life Insurance Companies
About Best Life Insurance Companies

We work with individuals across the nation to secure the best life insurance rates.

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