What Happens If You Outlive Your Term Life Policy?

At PolicySimple, we make it simple for you to understand your options and make decisions with confidence. In this guide to whole life insurance, we’ll cover what it is, how it stacks up against other types of coverage and whether it aligns with your long-term objectives.

What Is Whole Life Insurance?

Whole life is a form of permanent life insurance. It ensures that you provide a death benefit to your beneficiaries and also accumulates cash value over time — something only the insurance has to offer and that can grow on a tax-deferred basis.

You pay the same “premium” amount every month or year. A portion of the premium pays for insurance while the remainder is placed in a cash value account, which accumulates based on the guaranteed interest rate.

This also means that your policy is not just protection, it is an asset that can grow over time.

Advantages of Whole Life Insurance

Lifelong Coverage

Your whole life policy will remain in force for as long as premiums are paid, your whole life. This is perfect for individuals who want to leave a legacy, or for those who want to ensure that their family has financial security no matter how long they are around to provide for them.

Cash Value Growth

Whole life insurance creates cash value, unlike term policies, that you can borrow against or otherwise have access to in emergencies. This cash value can grow into a meaningful source of funds for retirement, big expenses or policy loans.

Fixed Premiums

Your premiums do not increase as you grow older or if you develop health issues. That means your costs are manageable and won’t skyrocket in old age.

Dividends (off participating policies)

Some whole life policies pay dividends, which are not promised but can be used to lower premiums, increase your cash value more rapidly or buy additional coverage.

Estate Planning Advantages

Whole life insurance is frequently utilized in estate planning because of its guaranteed payout and tax benefits. The payout is generally tax-free for beneficiaries.

Whole Life or Term Life: Which to Choose?  (potential chart for article)

Whole life is generally looked upon as a long-term financial planning tool, and term life is best for temporary protection needs, such as paying off a mortgage or raising children.

Who Is Whole Life Insurance For?

Whole life is good for:

• People who want to build wealth and secure permanent life insurance
• Parents and grandparents who seek to pass on an inheritance
• Business owners with a need for key-person coverage or buy-sell agreements
• People with long-term dependents, including a child with special needs
• Those making more who want to benefit from tax-deferred expansion and estate savings

Take Advantage of the Cash Value: Flexible but Responsible

There are a few ways to put that money you’ve amassed in your cash value to work, as soon as your balance accumulates to a certain level:

• Take a tax-free loan against it with a policy loan.
• Take money out (surrenders may reduce the death benefit)
• Premium payments, if you are experiencing financial hardship
• Give the policy back to the insurance company for the cash value (you will have lost coverage)

Just be aware that loans against the policy or cash withdrawals can diminish your death benefit or incur tax liability if not used carefully. That’s why PolicySimple provides assistance every step of the way.

How Much Whole Life Insurance Costs

Whole life insurance is costlier than term insurance because it provides permanent protection and builds cash value. Your premium will depend on:

• Age and gender
• Health and medical history
• Amount of coverage
• Insurance company rates
• Optional riders (such as disability waiver or chronic illness)

At PolicySimple, we make it easy for you to see rates from leading insurers to help you find the best combination of price and value.

Is Whole Life Insurance a Good Investment?

That is, it depends on what you’re trying to achieve financially. But if you need lifelong protection, hope to grow your wealth over time or are in search of an estate planning advantage, whole life might be right for you. If affordability is your primary concern, or if you only require coverage for a certain length of time, term life might be the winner.

Either way, the choice need not be daunting. PolicyGenius: With PolicySimple, not only do you receive plain English explanations regarding what you need but also access to the tools that make picking the perfect policy a piece of cake.

Final Thoughts

Whole life insurance gives you more than peace of mind – it gives the protection you need for life and provides your beneficiaries with guaranteed cash value and death benefit protection for as long as premiums are paid. It’s a forward-thinking solution that provides you peace of mind in something that cannot be guaranteed for anyone — what happens to your family when you’re gone.

Ready to try something new? Get covered for the rest of yours with PolicySimple. Compare quotes for whole life insurance today.