Beginner’s Guide to Whole Life Insurance

man meeting with an insurance agent to get whole life insurance

In this Article

If you’re looking for a life insurance policy that lasts a lifetime rather than a set term (aka term life insurance), permanent life insurance might be the plan for you. While there are many benefits to getting a permanent life insurance policy (such as whole life insurance or indexed universal life insurance), the greatest advantage is that you can have lifelong coverage all while building cash value that you can use later in life.  

In this article, we explain how whole life insurance works and how it can benefit your long-term financial plans. 

What is whole life insurance?

Whole life insurance guarantees financial protection and safeguards your future financial needs. This type of permanent life insurance is just like it sounds – insurance that lasts your whole life. You select an amount of coverage when you sign up for a policy and when you pass away, your beneficiary receives funds to use at their discretion. Many beneficiaries use death benefits to fund their children’s education, supplement retirement income and cover their loved one’s funeral expenses.

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Learn More About Final Expense Insurance

To learn more about whole life insurance policies that cover funeral expenses, check out our guide to final expense insurance.

Life insurance that builds cash value

Whole life policies are popular because they offer protection for life. They are also popular for their cash value component, which can be used to make partial withdrawals, take out a loan or in some cases, pay premiums.

How does whole life insurance work?
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Apply for Coverage

Whole life insurance starts with an application for coverage with an insurance company. With Quility, you have the choice between a digital consultation or an at-home consultation with a licensed insurance agent.

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Make Payments

Once your policy is in force with an insurance company, you pay premiums to maintain coverage. As your insurance needs change, your premiums can be adjusted – simply reach out to your agent.

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Use the Cash Value Growth Component

As your policy matures, you can withdraw from the accumulated policy cash value. If you don’t need life insurance anymore, you can surrender your policy and receive an equivalent sum of funds to the surrender cash value.

The first step to getting whole life insurance is to apply for coverage with an insurance company. Then, you’ll pay premiums to maintain coverage. 

Whole life policies have flexible terms, meaning you can avoid a lapse in your policy if you don’t pay your premium on time as well as adjust your policy as your needs change. As your policy matures, you can begin to use its cash value component to supplement income and build tax-deferred savings right inside your policy. 

Who needs whole life insurance?

Whole life insurance is right for you if you’re looking for a life insurance policy that guarantees a death benefit as well as an insurance solution that comes with additional perks, such as an accumulated cash value that you can borrow against and the flexibility to update your policy as life changes.  

Like other types of life insurance, premiums for whole life policies depend on your age and health at the time of your application. If you’re interested in whole life insurance, you’ll get the best rate by applying today. 

What is the difference between whole life and universal life insurance?

Universal life insurance is another type of permanent life insurance. While similar, universal life insurance is generally more affordable than whole life insurance as it is designed to last the average lifespan – rather than your whole life. Universal life policies may be more affordable, but you can expect to pay premiums for longer. Both options come with adjustable premiums, flexible policy terms and a cash value component.

Universal life insurance and whole life insurance both fall into the category of permanent life insurance, but there are some key differences between the two types of policies.   

Similarities  

  • Universal life and whole life insurance are two types of permanent life insurance coverage.  
  • Both universal and whole life policies come with a cash value component that policyholders can borrow against and use to build tax-deferred savings. 
  • If you pass away while your whole or universal life policy is in force, your beneficiary receives a death benefit that can be used to cover your funeral costs or outstanding debts, or it can leave a legacy for your loved ones.  

Differences 

  • While permanent coverage lasts for life and not a specific period of time (like term life insurance), universal life coverage lasts the average lifespan whereas whole life coverage does not expire; it lasts your whole life. 
  • Whole life policies have fixed premiums throughout the lifetime of the policy and universal life policies have flexible premium payments and death benefits. 
  • Premium payments are generally less expensive for universal life insurance than for whole life insurance.  
What is indexed universal life insurance?

Indexed universal life (IUL) is a type of universal life insurance where the cash value component is tied to a market index, providing an opportunity for stock market gains. Since IUL is a more complex type of policy, most people purchase it to enhance their investment portfolio or to build retirement savings.  

Is an IUL right for me?

Depending on your financial goals, a universal life insurance policy might be a good investment for you. Universal life insurance is ideal for those who want to secure long-term life insurance coverage and build tax-deferred funds. If you aren’t sure which type of insurance best fits your needs, chat with one of our licensed insurance agents– we are here to help you find the best insurance for your budget and lifestyle.  

Whole life insurance vs. term life insurance

Whole life insurance and term life insurance are two popular policy options with a few main differences.  

  • Temporary vs. permanent coverage: Term life insurance is a temporary life insurance policy whereas whole life insurance is a type of permanent life insurance. This means that when you purchase a term life insurance policy, you will “rent” coverage for 10, 15, 20, or 30 years, as opposed to “owning” your coverage when you purchase a permanent life insurance policy.   
  • Affordability: Term life insurance is generally the most affordable type of life insurance you can buy with rates starting at less than $20/month. Whole life is often more expensive than term life insurance due to its benefits, like cash value.   
  • Cash Value: Unlike some types of permanent life insurance (like indexed universal life insurance), term life insurance policies do not accumulate cash value. For this reason, term life insurance is a more straightforward type of policy that is ideal for individuals looking to protect their loved ones during a specific life stage.   
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Read More on Term and Permanent Life Insurance Policies

To learn more about the differences between temporary and permanent life insurance, check out our guide to the differences between term life and permanent life insurance.

How much does whole life insurance cost?

Everyone has different life insurance budgets and goals, but permanent life insurance policies (whole life) are generally more expensive than temporary life insurance policies (term life). However, with the increased premium comes peace of mind for a lifetime compared to certain stages of life. 

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Did you know Quility offers instant-decision whole life insurance?

Quility Secure Future Complete (QSFC) is underwritten by United Home Life Insurance Company (UHL) and United Farm Family Life Insurance Company (UFFL). This new portfolio of instant-decision whole life insurance offerings includes four unique products: Express Issue Premier, Express Issue Deluxe, Express Issue Whole Life and Guaranteed Issue Whole Life.

These product offerings bring coverage options to those that may have previously been declined or deemed uninsurable. Learn more here!

Is whole life insurance worth it?

Whole life insurance is not for everyone, but it is ideal for individuals who are looking for a permanent life insurance policy that does not expire. Whole life policies can also help you cover end-of-life expenses or pay off debt.  

At Quility, we offer trusted insurance solutions crafted to meet your needs:  

  • Final Expense Insurance: A whole life insurance policy designed to cover costs related to your passing, including medical expenses, a memorial, or funeral service. 
  • Debt Free Life: A modernized insurance solution that harnesses the power of the cash value of a whole life insurance policy to help pay down debts and build retirement savings.  
     
Get a whole life insurance policy in place today

Getting whole life insurance means choosing a solution that will stand the test of time. Whole life insurance offers permanent coverage, flexible premium payment options and a cash value savings component – as well as peace of mind for your family and finances.

Your agent can get you the best life insurance policy at the best price. We partner with more than 80 of the top life insurance companies and take the time to fully understand your budget and needs. Connect with a licensed agent today.

Let’s Get Started

Get a permanent life insurance policy that fits your needs with support from our trusted agents.

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Calie Brummer
Head of Digital Communications
Calie Brummer is a staff writer and Head of Digital Communications at Quility Insurance with a focus on financial well-being and life insurance solutions.