Policy Types

A Review of the Benefits of Whole Life Policies

For those needing a long-term, permanent type of coverage, whole life may be for you. Read this article to learn more about some of the major benefits to whole life, such as the cash value element.

What Are the Benefits of a Whole Life Policy?

When shopping for life insurance, you have a wide variety of options in which to choose from, based on your individual needs and budget. Two common life insurance policy choices are term life insurance and whole life insurance.

Term life insurance is often considered a type of temporary insurance while whole life insurance, is designed to cover you for the rest of your life (as long as premiums are paid). Moreover, whole life insurance offers additional benefits that term life policies don’t. Three of the most common benefits of a whole life insurance policy are:

#1 Protection to Last a Lifetime.

When a term life policy expires, your coverage ends. You are then left with the choice of either letting the policy expire, or purchasing a new policy based on your current age and health status. For example, if at age 30 you bought a 20 year term policy and you are now age 50, your term policy will end. You can buy another life insurance policy, but the premium will be based on new rates that may be higher. A key benefit of whole life is that it’s considered a permanent life insurance policy. It’s meant to provide you with a lifetime of coverage protection with premiums that won’t increase, won’t expire after a specific number of years, and can’t be cancelled due to health or illness (unless premiums are not paid).

#2 Cash Value.

Whole life insurance has a cash value component that may accumulate over time, and is one of the key benefits of owning a whole life insurance policy. With whole life, it’s possible to borrow against some of the cash value in your policy (up to a limit) for any need that you may have. It’s important to note that if you were to die unexpectedly, any outstanding loan balance remaining on your whole life policy may be deducted from your death benefit and will accrue interest.

#3 Flexibility.

Another benefit of whole life insurance is its ability to offer you some flexibility. With its potential to accumulate a cash value over time, you have the option to use this cash for a variety of reasons. You might also choose to simply leave it alone with the possibility of increasing your policy’s cash value over time.

Once your whole life policy has been issued, it cannot be revoked, reduced, or canceled for any reason, except in cases of nonpayment or fraud. This makes whole life insurance a good choice, becoming a true long-term investment and offering you the peace of mind that comes with owning a permanent life insurance policy.

Still have questions about the many benefits of owning a whole life insurance policy? We’ll help you get the answers you need for questions about life insurance.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Whole Life Insurance

There's a variety of life insurance plans designed to meet a variety of needs. For those seeking a long-term, more permanent, type of coverage, whole life insurance can be a great fit. This article explores some of the major benefits of whole life insurance and why it might need to be considered when assessing your goals. For more information, visit our learning center.