Whole Life Insurance: Guaranteed Coverage, Cash Value, and When It Is Worth It
Whole life never expires and builds guaranteed cash value. It costs far more than term, so it is worth being clear about when that trade actually makes sense.
Whole life, in plain English
Whole life insurance covers you for your entire life, not a set term. The premium is fixed, the death benefit is guaranteed, and part of what you pay builds cash value you can borrow against.
That permanence is the point — and the reason it costs several times what the same coverage costs as term. It is the right tool for a lifelong need, and the wrong one for a temporary one.
How whole life works
You pay a level premium for life. The policy guarantees a death benefit no matter when you die, and a portion of each premium builds cash value at a guaranteed rate. Some policies also pay dividends, though dividends are not guaranteed.
Because the coverage never expires, a whole life policy is priced to last decades and to always pay out. That is why, dollar for dollar of death benefit, it costs far more than term.
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