Whole Life Insurance
Lifetime coverage with a level premium and cash value, for residents of Texas, Colorado, South Carolina and Michigan.
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Whole life insurance is permanent coverage. It pays a death benefit whenever the insured person dies, as long as premiums are paid, and it builds cash value the owner can use while living. The premium is set when the policy is issued and does not go up with age.
What Whole Life Insurance Includes
- Level premium paid monthly or yearly on a fixed schedule, for life or for a limited number of years on limited-pay versions.
- Death benefit for your whole life, paid to the beneficiaries you name.
- Cash value that grows tax-deferred at a rate set in the contract and can be borrowed against or withdrawn.
- Dividends on participating policies, which can be taken in cash, used to pay premiums or used to buy more coverage. Dividends can change from year to year.
The Texas Department of Insurance consumer life insurance guide lists the trade-offs: whole life premiums start higher than term premiums but usually do not go up, there is little or no cash value in the first few years, and the policy is not built for frequent changes.
Uses for Whole Life Coverage
Whole life fits needs that last as long as you do. Paying final expenses and debts, leaving money to a spouse, children or grandchildren, covering estate settlement bills, funding a gift to a church or charity, or providing for an adult child who will need support for life. The Insurance Information Institute's life insurance basics also points to whole life as a forced savings habit, since most people keep paying their premiums.
Because the coverage never expires, the death benefit is usually smaller than a term policy bought with the same premium. Many households pair a modest whole life policy with a larger term policy for the years when the mortgage and children need the most protection.
Whole Life Insurance for Texas, Colorado, South Carolina and Michigan Residents
Valor Life Benefits places whole life coverage for people living in Texas, Colorado, South Carolina and Michigan. Riders that can be added in many states include a waiver of premium if you become disabled, an accelerated death benefit for a terminal illness, a child term rider and paid-up additions that grow the death benefit over time.
Before buying, ask for an illustration that shows the policy's contract minimum values next to its projected values, and the history of the company's projected versus paid dividends. Look at the surrender charges too: cashing in a whole life policy in the early years returns far less than the premiums paid.
Whole Life Insurance Questions
Does whole life insurance have cash value?
Yes. Part of each premium goes into the policy's cash value, which grows over time at a rate set in the contract. It takes years to build, and in the early years it is usually small. The owner can borrow against it, use it to pay premiums, or take it by surrendering the policy.
Is whole life insurance permanent?
Yes. Whole life stays in effect for your entire life as long as premiums are paid and the policy is not cashed in. That is the main difference from term coverage, which ends with the term.
How does whole life insurance build cash value?
The premium is level for life. In the early years it is more than the charge for covering a younger person, and the company invests the difference to help pay for coverage at older ages. By law, once those reserves reach a certain amount they must be available to the owner as cash value if the owner stops the plan. Some policies from mutual companies also pay dividends, which are not certain and can be lower than projected.
How does life insurance loan work?
On a cash value policy you can borrow from the insurer using the cash value as collateral. There is no credit check and no set repayment schedule, but interest is charged. Any loan balance left unpaid at death is subtracted from the death benefit, and a loan that grows larger than the cash value can make the policy lapse.
Is whole life insurance universal?
No. Both are permanent, cash value policies, but they handle premiums differently. Whole life premiums are paid on a set schedule. Universal life lets you change the premium and death benefit within limits, and the policy stays in force only as long as the cash value covers the monthly charges.
Can you get life insurance for life?
Yes. Whole life is designed to last your whole life, and universal life can be set up to run to age 95, 100 or later. Term coverage, by contrast, usually cannot be bought past age 70 or 80.