A whole life insurance policy is a type of permanent life insurance that provides coverage for the insured's entire lifetime, as long as the premiums are paid on time. Unlike term life insurance, which covers a person for a specific period (e.g., 10 to 30 years), whole life insurance guarantees a death benefit to beneficiaries whenever the insured dies
. Key features of whole life insurance include:
- Lifelong coverage: The policy remains in force for life, with fixed premiums that typically do not increase with age
- Cash value component: Part of the premiums go into a savings account called cash value, which grows over time at a guaranteed rate on a tax-deferred basis. The policyholder can borrow against or withdraw from this cash value during their lifetime, though loans and withdrawals reduce the death benefit
- Fixed premiums: Premiums are generally level and predictable throughout the policy term
- Death benefit: A guaranteed amount paid to beneficiaries upon the insured's death, which may be increased by dividends or decreased by outstanding loans
Whole life insurance is often used for long-term financial security, estate planning, and wealth accumulation, providing both a death benefit and a savings mechanism in one policy
. Some policies may have a maturity age (such as 99 years), after which the coverage ends if the insured is still alive
. In summary, a whole life policy is a permanent life insurance contract that combines lifelong protection with a cash value savings component, offering financial security and flexibility for policyholders and their beneficiaries.
