The benefits of whole life insurance include (first and foremost) financial protection for your loved ones. But you also get lifelong coverage, cash value, living benefits, and a stable, locked-in rate for both your payments and your cash value’s interest rate.
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Request a Free QuoteBenefit #1: Tax-Free Death Benefit
The most important benefit – and the #1 reason to buy whole life in the first place – is the money that will go to your loved ones if anything happens to you. You can name as many beneficiaries as you like, and specify the percentage of the death benefit they should receive. You can name a spouse, kids, grandkids, or other relatives. You can also use whole life insurance to leave money to a charity or your alma mater.
The death benefit is 100% income-tax-free, unless you and your agent intentionally set up your account is set up as a MEC (modified endowment contract). Don’t worry – if you don’t know what a MEC is, your policy won’t be set up that way, and your loved ones won’t pay an income tax on the death benefit.
That death benefit could be a lifeline. Or it could be a final gift. No matter what your family’s financial situation is, the death benefit symbolizes your love for them. There are no exclusions on how they can spend the money. Rent, mortgage, utilities, and daily bills – it could all be covered, thanks to your policy. Or that money could help your loved ones realize a dream, like sending a child to college. And it’s all because you made a choice to protect them and provide for them.
➡️ Want to talk to a real person about the benefits of whole life insurance? We’re here for you! Call us at (800) 823-4852 or click the button below to request a free quote!
Request a Free QuoteBenefit #2: Coverage that Never Expires
A whole life insurance policy does exactly what it implies – it covers you for your whole life. When you buy your policy, it’s designed to “mature” (be complete) at a particular age, usually age 100. Compare that to a term life policy, which expires at the end of the term or renews at a much higher rate. One of the biggest benefits of whole life insurance is the fact that you can’t outlive it. Your loved ones are guaranteed to get the death benefit, as long as you keep your policy active.
If you’re the type who doesn’t want to pay for coverage you might not use, you might not like the idea of a term policy. If you outlive the policy, it’s great that you’re still alive – but at the same time, you don’t get a return on that investment. That’s not the case with whole life. It will always pay out, in one of two ways:
- If you pass away before the policy matures: Your designed beneficiary(ies) should file a claim to get the death benefit.
- If the policy matures before you pass away: The insurance company will pay you the death benefit, and it will be up to you to leave it to your loved ones through your will.
➡️ Want to talk to a real person about whole life insurance? We’re here for you! Call us at (800) 823-4852 or click the button below to request a free quote!
Request a Free QuoteBenefit #3: Cash Value
Whole life grows cash value over time. Your cash value is an account attached to your policy – think of it like a savings account. Every time you make a payment, the insurance company takes out the cost of your coverage. What’s left gets put into your cash value account. The insurance company will then pay interest on that account, which compounds tax-deferred. Later, when the account has grown, you can access that money in several ways:
- Policy loan. You can borrow against your cash value, while leaving it in place to continue to grow. You borrow the money from your insurer, and pay it back on your schedule. If you don’t pay it back, the insurer will deduct any outstanding amount (including fees) you owe before they pay out the death benefit. Some online financial planners advise using policy loans in place of bank loans for major purchases – you may see this concept referred to as “infinite banking” or “become your own banker.”
- Partial withdrawal. You can pull out some of your policy’s cash value to spend as you see fit. Your insurer will charge a small fee, but you won’t have to repay this money, as you would a loan. Keep in mind, however, that reducing your cash value means it won’t grow as quickly. If you’re focused on growth, taking a policy loan keeps that cash in place to earn more interest over time, and you still get the money you need or want for another use.
- Surrender value. If you were ever to cancel your policy (“surrender” in insurance-speak), you are entitled to take your cash value with you, minus a surrender fee. Unless you truly no longer need the policy, we never recommend surrendering a policy. If you can’t afford the coverage, we can work with you to find something more affordable so your loved ones don’t lose the death benefit.
- Pay your policy premiums. When you have enough cash value accumulated, you can even use it to pay for your policy. The only catch? It’s up to you make sure you leave enough cash value in your account to keep your policy funded.
Cash value is one of the benefits of whole life insurance that you don’t get with a term policy. In most cases, that cash value will not be paid out in addition to the death benefit. So it’s in your best interest to use it, whether as supplemental retirement income or to pay a bill or to check-off a bucket-list item.
➡️ Want to talk to a real person about whole life insurance? We’re here for you! Call us at (800) 823-4852 or click the button below to request a free quote!
Request a Free QuoteBenefit #4: Living Benefits
Almost all policies have living benefits, so we can’t say this is one of the exclusive benefits of whole life insurance. But living benefits are amazing so we had to tell you about them!
Living benefits refers to ways you can benefit from your policy while you’re still alive. It’s true – you don’t have to die to be able to use your life insurance! Cash value, as we mentioned above, is one great living benefit of whole life. Other living benefits come in the form of free and paid riders (policy add-ons) that let you access the death benefit if you experience certain medical needs. Riders and prices vary by insurer and policy, but here are some of the most common:
- Terminal illness. This one’s almost always available…and almost always free! It lets you tap into the death benefit if you’re diagnosed with a terminal illness and given a short time left to live (usually less than two years). You can use the cash to pay for treatment, try alternative treatments not covered by your insurance, or just gather your loved ones for a final experience together. There are no exclusions or limitations on what you can do with the cash.
- Critical & chronic illness. Some insurers offer riders that let you access the death benefit if you experience a critical or chronic illness. These riders will usually cost extra, but may be worth it if you’re worried about the potential for bills associated with illnesses like cancer, heart disease, stroke, COPD, diabetes, and more.
- Long-term care. Some insurers also offer a paid long-term care rider. This lets you use money from the death benefit to pay for long-term care later in life, should you need it. If you never need care, you won’t have spent the extra money on a stand-alone long-term care policy, and your loved ones will receive the death benefit as you intended.
➡️ Want to talk to a real person about living benefits? We’re here for you! Call us at (800) 823-4852 or click the button below to request a free quote!
Request a Free QuoteBenefit #5: Locked-In Payments & Interest Rate
When you buy a whole life policy, two numbers get set in stone: your payment amount and the percentage of interest the insurer will pay to your cash value account. Whole life is the only type of cash value insurance that offers these guarantees. Other types, such as universal life, have a flexible payment amount and an interest rate that fluctuates over time.
If you’re the type who always wants to know what you’ll have to pay so you can prepare a budget, whole life makes that easy. And if you want to lock in an interest rate for your cash value, whole life is the only way to do it. Other coverage types do offer ways you can try to grow that cash value faster with the chance to earn higher rates, but there’s also either risk of loss (variable universal life) or zero percent growth (indexed universal life).
Whole life is the simplest form of cash value life insurance – and the easiest to understand, thanks to its flat rates of payment and interest. If you want protection you can’t outlive that you can set and forget, whole life is a great option.
➡️ Want to talk to a real person about the benefits of whole life insurance? We’re here for you! Call us at (800) 823-4852 or click the button below to request a free quote!
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