Whole life insurance provides coverage throughout the life of the insured person.
In addition to paying a tax-free death benefit, whole life insurance also contains a savings component in which cash value may accumulate. Interest accrues on a tax-deferred basis.
Whole life insurance policies are one of several types of permanent life insurance, meaning they cover you for your entire life. Universal life, indexed universal life, and variable universal life are others.
KEY TAKEAWAYS
Whole life insurance lasts for an insured’s lifetime, as opposed to term life insurance, which is for a specific amount of years.
Most whole life policies feature level premiums, meaning the amount you pay every month won’t change.
Whole life insurance has a cash savings component, known as the cash value, which the policy owner can draw on or borrow from.
The cash value of a whole life policy typically earns a fixed rate of interest.
Withdrawals and outstanding loan balances reduce death benefits.
