Whole Life Insurance
Long-term coverage with level premiums that never increase.
Whole Life is ideally suited for long-term insurance needs. A level premium is set at the beginning of the policy and does not increase over time. Policies can be participating or not — participating policies benefit when the insurer is profitable, and additional dividends are credited to the policy values.
The insurer invests the additional fund values and your equity performance is dependent on their performance. You do not have the investment decisions like a universal life policy. Dividends can be used to purchase additional paid-up insurance, also known as paid-up additions.
In the future, you can use dividends to pay the premium and keep the insurance in force — this is called premium offset. You can withdraw, borrow, and/or cash in a policy to access the equity of a whole life policy. Dividends can also be paid in cash. This is the premium product for long-term insurance coverage without rising premiums.
Dividend Options
- Paid-Up Additions — purchase additional insurance with dividends
- Premium Offset — use dividends to pay your premiums
- Cash Dividends — receive dividends as cash payments
- Accumulate on Deposit — let dividends grow with interest
Advantages
- Ideally suited for long-term insurance needs
- Premium does not increase over time
- Choose to participate in insurer's profits
- Dividends can purchase additional paid-up insurance
- Withdraw, borrow, or cash in policy equity
- Premium product for lifetime coverage
Considerations
- Initially costly compared to term insurance
- May not be affordable for all coverage needs
- Dividends and cash values can be small in early years
- Should not be used as a primary investment fund