The decision to purchase life insurance can be a complicated and overwhelming one, but for many people, it brings a sense of relief and comfort to know their loved ones will be protected if they pass away. There are a few items to consider when picking the right policy to fit your family’s needs, and whole life insurance may be a good choice.
What is whole life insurance?
Before we break down the value of whole life insurance, it’s important to understand what it is. Whole life insurance is a type of permanent insurance that stays with you throughout your entire life if monthly set premiums are paid into it. Whole life insurance can accrue cash value, meaning it can also be used as a type of tax-deferred savings account or an asset to borrow loans against, in case of emergency.
An illustration is provided by the insurance carrier to show you how the cash value available to you changes over the lifetime of the policy, which is based on the premiums collected and the guaranteed minimum interest rate. Upon your death, your beneficiaries are guaranteed to receive the death benefit amount purchased, minus any outstanding loans against the policy.
Whole life is a guaranteed assurance for all circumstances in life. It can offer:
Protection for Families: financial support for mortgage loans, education funding, final expenses, bereavement period, and daily living costs.
Disability Protection: some whole life policies can still be funded if the insurer becomes disabled and is unable to pay the premiums. It might even provide a cash benefit for incapacitation or terminal illness that may reduce the burden on your loved ones. Be sure to review your policy in detail to understand if additional benefits are included and how they work.
Protection Against Liability: in many states, a whole life policy is protected against creditor claims.
Protections for Businesses: some whole life insurance policies can be used to nurture a business by funding retirement programs and buy-sell agreements, covering loans, and paying into stock-redemption plans.
Ability to Plan an Estate: if the insured does not have any beneficiaries, they can plan an estate or set up a charity, making an impact in the lives of others far beyond the grave.
Every whole life insurance policy is tailored to the insurer, dependent upon several factors such as desired coverage amount, additional benefit features added, and risk of mortality. According to Forbes Advisor, factors that might affect whole life premiums can include tobacco use, age, medical history, driving record, criminal history, credit report, and lifestyle, dangerous hobbies (such as extreme sports).
Traditional underwriting for many policies requires a health exam, blood draw and more to be accepted. Simplified issue policies with only a medical questionnaire have become increasingly more common. In these cases, the insurance carrier weighs the risks, and premiums are provided accordingly. Those with excellent health may benefit from going the traditional underwriting route, but in most cases, the rates are affordable and not drastically different. Simplified issue policies are easier and faster to obtain with comparable rates.
How much does whole life insurance cost?
Though whole life insurance is more expensive than term life insurance, the lifelong benefits may justify the costs. Since age and health weigh heavily on life insurance rates, purchasing earlier in life provides a guarantee the premium will not increase to become unaffordable in the future. As we mentioned earlier in the article, whole life insurance lasts your entire life or a set age such as 100 years and beyond. There’s guaranteed cash value growth, and many plans allow flexible tax-deferred investment options.
When weighted against the cost of a plan, many consider it a worthwhile trade for their life needs, especially for younger families wanting to leave behind flexible financial options for their loved ones.
The table below takes a look at the average cost of whole life insurance by age and gender.
Age | Avg. Monthly Rate for Men | Avg. Monthly Rate for Women |
30 | $193.00 | $172.00 |
40 | $297.00 | $240.00 |
50 | $475.00 | $380.00 |
Is whole life insurance worth it?
The value of a whole life insurance plan depends entirely on your long-term needs and the needs of your loved ones long after you’re gone. Take a look at the following examples to help determine if whole life insurance is right for you.
Whole life may be for you if: | Whole life may not be for you if: |
You want a guaranteed death benefit with premiums that will not rise if your health fails you. | You have short term life insurance needs, such as, coverage until your children become adults, or you plan to use it to cover a specific debt that will terminate in a set time period. |
You want life insurance that double-functions as an emergency fund or a specialized yet flexible financial asset. | The premiums are unaffordable. In which case, there are other options like term life insurance available that provides coverage for a specific timeframe. |
You have dependents, such as a spouse or children, and want to ensure their financial security. | |
You want to establish an Estate or Charity to leave a legacy behind. |
If you’re unsure if a whole life insurance policy is a good fit for you, it might be helpful to compare plans or speak with a certified insurance expert. Contact Enrollment First, Inc. at (866) 816-6786 Monday through Friday from 8am-7pm EST to inquire about our upcoming EMC National Whole Life insurance benefit options.
The above content is purely informational and is not comprehensive.
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