Whole life is permanent insurance - it never expires as long as premiums are paid. It builds guaranteed cash value over time. Premiums are higher than term, but they never change, and the policy participates in carrier dividends.
Typical cost
$300-$600 / month for $500K of coverage at age 40. Final-expense whole life ($10K-$25K) costs $50-$120 / month.
Best for
- Estate planning use cases
- Buy-sell agreement funding
- Buyers who want forced savings + life coverage in one
- Special-needs trust funding
How it works
- 01
You pay a level premium for life (or for a 'paid-up' period like 10 or 20 years).
- 02
Cash value grows on a guaranteed schedule + non-guaranteed dividends.
- 03
You can borrow against cash value tax-exempt.
- 04
Death benefit pays out tax-exempt at any age.
Pros
- • Lifetime coverage - never expires
- • Guaranteed cash value growth
- • Premiums never increase
- • Dividends from mutual insurers can grow the death benefit
Cons
- • Premiums significantly higher than term
- • Cash value growth is conservative - not an investment substitute
- • Surrender charges reduce early access to cash value