Whole life insurance: Compare and find the best policy | finder.com

Whole Life Insurance Finder

Permanent coverage that builds cash value pays a death benefit.

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Coverage for life, whole life insurance guarantees a payout to your beneficiaries. And it gives you access to cash value when you need it. But this coverage can be expensive.

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What is whole life insurance?

A whole life insurance policy provides coverage that lasts your entire life, as long as you pay your premiums. These policies can earn cash value of a portion of your premium, and builds over time.

How does whole life insurance work?

Whole life insurance policies invest a portion of your premium so it can build tax-free cash value over time. After several years your earnings grow into a surplus, sometimes as high as 6%, and you can use that money to pay your premiums or withdraw the money to cover other costs like education, mortgage or even a vacation.

With whole life insurance, the cash value does not automatically roll into your total cash payout. If you don’t use it while you’re alive, you’ll lose it. And the draws you take from your cash value won’t affect the policy’s payout.

How much does whole life insurance cost?

Whole life insurance costs significantly more than a term life insurance plan. This is because it lasts for your entire life, and of the earned cash value. And coverage is generally higher, between $100,00 and $5 million.

A plan for a 30-year-old nonsmoker could pay more than $200 a month for $500,000 coverage. That’s significantly more than a term policy, but it’s mainly because your beneficiaries are guaranteed a payout.

Are whole life premiums tax deductible?

The IRS states that premiums paid for whole life insurance are not tax deductible. However, you are not required to pay taxes on the accumulated cash value.


What are the pros and cons of whole life insurance?

Whole life insurance policies present a number of benefits and drawbacks to owners.

Pros

  • Peace of mind of having a lifelong protection.
  • Often used as mandatory savings.
  • Access to cash when your circumstances change.
  • Premium remains the same throughout the life of the policy.
  • Guaranteed death benefit.
  • Your cash value portion will continue to grow each year with guaranteed interest earnings.
  • Possible dividend earnings, which can be used to increase your cash value, reduce premiums, or withdrawn.
  • Can be used to save money to fund your retirement.

Cons

  • Premiums are much higher compared to term life insurance.
  • Not as flexible coverage needs to increased or decreased.
  • Coverage doesn’t keep up with inflation, which puts your beneficiaries at risk of underinsurance at the time of claim.
  • Poor investment choice as the interest you earn on the cash value may be lesser than other available investment alternatives.

It’s important to note that whole life insurance policies can have expiration dates. Some policies expire when the insured turns 100 or 121 years old. If this is the case, the policy would expire, but your cash value would still be payable.


Find a whole life insurance policy today

Updated July 17th, 2019
Name Product Issue Age Financial Strength Pays Dividends
18 to 85
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25 to 80
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18 to 80
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50 to 85
A.M. Best: A-
N/A
Get a term or whole life insurance quote from Fidelity Life - starting as low as $15/day.
18 to 75
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18 to 80
Fitch Ratings Agency: A+
Yes
Affordable life insurance for active duty, reserve, and retired United States military service members. Get a free quote online.

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What’s the difference between whole life and term life insurance?

Similar to whole life insurance, term life coverage provides a lump sum death benefit in the event that the policyholder passes away while the policy is still active. There are some notable differences between whole life and term life insurance. These include:

Whole life insuranceTerm life insurance
CostMore expensive, due to the investment portion of the policy.More cost-effective.
Length of coverageCoverage for your entire life, provided that premiums are paid.Remains active for the term selected by policy owner at time of application. This can usually be renewed into the future.
FlexibilityNot so much — you can’t change your coverage amount when your needs change.Very flexible — you can apply to increase your coverage typically without having to provide further medical evidence.
Features and benefitsThe cash value component allows you to borrow funds when required, used as a collateral against a loanGreater range of features and benefits — you can also link term life with other types of life insurance to cover temporary and permanent disability.

Learn more about whole life versus term life insurance

Financial advisers will often recommend term life insurance for insurance purposes and suggest that you find other ways to invest the remainder of your money. However, this depends on how much money you have available for investment purposes and whether you have the capital available to take advantage of the most profitable investments.


Bottom line

Life insurance is a serious matter, so it’s important that you give it the proper attention. When you know about all of the different policies on the market, you can narrow down which one will work best for your situation. To get the most competitive rates possible with the most flexible policy, reach out to a few choice providers and get quotes to see who can offer you the best deal.

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