Whole Life Insurance Benefits

Whole life insurance is just that–a permanent type of life coverage that lasts for the duration of your life without an expiry date. Unlike many other forms of life insurance, there is no fixed end point of the policy; instead, the insurance coverage remains in place until you pass away, provided you comply with the policy terms.

One of the many positive aspects of whole life insurance is that it provides numerous possible add-ons, benefits, and features, with an account value that can accumulate over time, often included as standard in the policy. Some whole life policies also provide varied options for adding insurance riders, like an accelerated benefit rider that might allow the policyholder to access the benefits of their coverage sooner, such as if they become unwell or injured.

Every life insurance product may have potential pros and cons based on your financial priorities, the insurance premiums you consider affordable, and the benefits and features you need from your coverage. However, reviewing the array of policy features and functions built into a whole life insurance product may illustrate the appeal of this coverage for people looking for certainty that their life cover will meet their expectations.

Whole life insurance products aren’t solely a way to provide financial benefits for your loved ones in the future. Life insurance policies can also incorporate account values, which offer the opportunity to make contributions that attract interest or returns, depending on the specific insurance product.

There are varied ways to utilize this policy feature, but you might:

• Create a secondary, secure form of financial savings as part of your retirement planning
• Draw against your life insurance policy account value as a loan or lump sum
• Opt to maximize your financial contributions to grow the account value, usually in a tax-advantaged way

Depending on the life insurance policy you select, account values may be linked to fixed or variable interest rates or enable you to participate in investment markets, in which case the returns are paid as dividends. If the policy's returns are sufficient, they may be able to cover the insurance premiums attached to the policy, be withdrawn as a cash benefit, or be added to the account value to attract financial returns or interest going forward.

One of the important aspects of whole life coverage is that you typically select the death benefit at the point of purchase and retain that benefit without any potential for the amount paid to your beneficiaries to drop. There are caveats, such as if you do not keep up with the insurance premiums or withdraw an unpaid loan, but in most cases, the financial death benefit is stable and not subject to change.

For many, the life insurance benefit is that they can calculate the value their loved ones would need to live comfortably, pay off a mortgage, or cover a child’s education fees with the peace of mind that the financial death benefit is verified.

Many types of life insurance, including term cover, have an expiry date. That means your life insurance policy might, for example, end on a predefined date or when you hit a specific age. The contrast with whole life insurance is that it does not end until you pass away. As the name suggests, a whole life policy remains valid for your entire lifetime, provided you comply with the insurance terms, such as paying the life insurance premiums.

Having lifetime insurance gives the assurance that your family will receive a known death benefit to help cover funeral expenses or medical bills, support their quality of life, and help ensure your financial dependents are well looked after, regardless of how many intervening years there may be until you pass away.

For many families, purchasing a whole life insurance policy is part of their approach to long-term financial planning. This ensures a legacy is available for future generations and helps protect against an unexpected death that would otherwise leave loved ones financially vulnerable.

How Much Does Whole Life Insurance Cost?

The costs of whole life coverage can vary. They will depend on the policy, the death benefit value you require, the additional features incorporated into the insurance, and your risk profile.

In most cases, you can select the level of insurance coverage you would like, although other factors, such as your age and health, lifestyle, and occupation, may influence your policy premiums. Although the permanence and certainty of whole life coverage mean the insurance premiums are often higher, these may also be lower if you are younger or have a low-risk career.

Do the Premiums Against a Whole Life Coverage Policy Increase With Age?

Normally, life insurance premiums do not. While whole life tends to be more expensive than other less comprehensive types of life insurance, most policies provide a static premium, which means that purchasing life coverage at a younger age and when you have a lower risk profile could mean you benefit from more attractive premiums, which will remain constant.

Is the Account Value Element of a Whole Life Coverage Product Guaranteed?

We’ve explained the benefits of whole life in a generalized way, and the exact terms, features, and returns available will naturally differ between whole life insurance policies. Some whole life policies offer an account value that grows at a guaranteed or predetermined rate based on an interest rate that might be static or linked to inflation, for example.

Other whole life products have an account value linked to an investment or mutual fund. In this case, the policy returns are earned as dividends, which might be structured as a profit share or dependent on how the underlying fund or asset performs.