Whole life insurance, also called permanent life insurance, offers a lifelong safety net. Unlike term life insurance, it doesn’t have a predetermined term. Instead, it provides coverage for your entire life, from the day you purchase the policy until you pass away, provided premiums are paid as agreed.
The primary distinction of whole life insurance is its dual-purpose nature. In addition to the death benefit paid to beneficiaries upon the policyholder’s passing, whole life insurance also accumulates a cash value component over time. A portion of the premiums paid goes into this cash value, which grows tax-deferred. The policyholder can access this cash value through loans or withdrawals, offering financial flexibility and serving as a source of savings.
Whole life insurance is often chosen by individuals who want protection and a long-term financial strategy. It is a lifetime asset that can provide financial stability, help with estate planning, and supplement retirement income.
However, whole life insurance typically comes with higher premiums than term life insurance. These premiums remain level throughout the policy’s existence, which can be advantageous for individuals who want predictable costs as they age. Nevertheless, the initial cost can be a barrier for some, and there might be better options than whole life insurance if you’re looking for straightforward, affordable coverage for a specific period.
