WHOLE LIFE INSURANCE - WHAT IS IT

Whole life insurance is a type of permanent life insurance that’s meant to last until the day you die, regardless of age

With whole life insurance policies, consumers pay the same premium for the duration of their policy. Meanwhile, the Death Benefit (DB) also stays the same, as long as premiums are paid, and regardless of how long one lives (unless there is an outstanding policy loan).

Whole life insurance policies build cash value, and that cash value increases over time as you pay your premiums. While premium payments remain constant, cash value consistently grows. The cash value in these policies can be borrowed by the policy’s owner, in case of emergencies, or other financial need circumstances. The Death Benefit can only be decreased if a loan on cash value is not repaid to the policy – outstanding policy loan.

Example: Insured has a $100,000 Whole Life insurance policy. After 12 years of premium payments, the insured borrows $1,000 from the cash value of the policy. If the insured dies before repaying the $1,000 loan; The Death Benefit payout will be $99,000 ($100,000 DB - $1,000 loan = $99,000).



This type of policy is often used for Final Expense, and future Tuition payments.