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Whole life insurance: get your questions answered

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What does whole life insurance mean?

Whole life insurance is the most common type of permanent life insurance and it’s a policy that lasts your entire life. Beneficiaries receive a tax-free payment (death benefit) when you die and the policy also has a cash value component that earns interest, which the policy owner can borrow against or withdraw from.

Whole life is a great option for those with a large estate, a family business, or those caring for long-term dependents. For most families, term insurance is the best choice. However, for some individuals, getting a smaller whole life policy in addition to term may be a good option.

Whole life insurance also comes with several desirable features:

  • The policy stays in place regardless of changes in your health
  • Rates never change regardless of health
  • Guaranteed cash value growth
  • Dividend earnings based on the insurer’s annual profits (available on some policies)

Because whole life insurance offers these excellent benefits, it’s important to know upfront that it generally costs 10-15 times more than term life insurance. Each time you pay a premium, part of that payment is put towards the cash value that grows at a set interest rate. Once enough of that cash value is built, you can borrow against your policy to supplement retirement income or whatever you wish.

Like other life insurance policies, if you pass away with a whole life policy, your insurer pays the death benefit to your beneficiaries. This lump-sum payment can help them with funeral costs, debts, and any other expenses that arise. Most importantly, it lets your loved ones maintain their lifestyle.

Is whole life the same as permanent life insurance?

Whole life insurance is one type of permanent life insurance. Permanent life insurance refers to  a group of policies that last your entire life, as opposed to term life insurance, which lasts a specific number of years.

Why buy whole life insurance?

For most, term life insurance is all they need to protect their loved ones from the what-ifs. However, supplementing a term life policy with a smaller amount of whole life can be a lifesaver if you have more complex financial needs.

You should consider whole life if you:

  • Have a large estate
  • Own a family business
  • Care for long-term dependents
Whole life insurance benefits extend beyond a lifetime of coverage. Other perks include:
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If you choose a participating policy, you share in the company’s annual gains and can spend the earnings as you wish.
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Builds Cash Value

Your policy receives guaranteed interest at a fixed rate on its cash value. You can use this to borrow against your policy.
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Death Benefit

Your designated beneficiary(ies) receive a tax-free lump sum of money that can be spent how they choose.

How does whole life insurance work?

Whole life insurance coverage stays in place as long as you pay the premiums.

Once you start paying premiums, here’s what you can expect:

  • You pay your fixed-rate premiums as they’re due.
  • Each time you make a payment, a small percentage is set aside to build up your cash value, which is separate from the death benefit.
  • Once enough money is set aside, you can borrow against it or make withdrawals.
  • If you bought a participating whole life policy, you can also earn dividends based on the carrier’s annual investment returns and claims experience.

Whole life insurance vs term

The primary differences between whole and term life insurance are are how long the policies last and how much they cost.

What they have in common:

  • Fixed Rates
  • Tax-Free Death Benefit

Where they differ:

  • Whole life insurance lasts a lifetime, is more expensive, and has a cash component you can access.
  • Term life insurance is designed to be more affordable and last a set amount of time.
Term Life Insurance Whole Life Insurance
Coverage length 5, 10, 15, 20, 25, 30, 35, or 40 years Entire life
Coverage amount $50,000 – $65M+ 10,000 – $65M+
Cost $ can fit into most budgets $$$ can fit into some budgets
Features Fixed premiums (won’t increase or decrease)

Fixed death benefit (proceeds paid to beneficiaries won’t change)

Can convert into a whole life policy

Optional riders available for additional benefits

Fixed premiums (won’t increase or decrease)

Some policies can have increasing death benefits

Some policies have dividend payouts

Cash value can accumulate to substantial amounts that allow for withdrawal and loan options

Optional riders available for additional benefits

How to get whole life insurance

Buying whole life insurance through Quotacy is straightforward. Complete our short, online questionnaire and one of our licensed agents will reach out to you to explain your options and provide a personalized quote.Here is what it looks like to buy whole life insurance looks like with us:

  • Complete the questionnaire and get a quote.
  • Talk to an agent to determine your coverage needs.
  • Apply for whole life insurance coverage.
  • Your agent will guide you through the buying process.
  • Accept your offer (or deny it, you have no obligation to accept).
  • Start payments and you’re insured.

Buy whole life insurance online with Quotacy

The unique benefits of a whole life insurance policy ensure your loved ones are well taken care of after you’re gone. That’s true peace of mind.

We believe everyone who needs life insurance deserves to have it. No exceptions. Protect what matters and get a quote for whole life insurance today.

Questions? Talk with our experienced advisors.