Whole Life Insurance What Is Whole Life

Permanent life insurance covers the entire life of the insured person. Whole life insurance, or whole of life assurance sometimes called "straight life" or "ordinary life," is a life insurance policy which is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date.

Types Of Whole Life Insurance

Different types of permanent life insurance include whole life, universal life, and variable life.

  • As long as you pay your premiums, your beneficiaries will receive the death benefit when you die.
  • This type of insurance also combines death benefits with the opportunity to build savings tax-deferred.
  • Part of your premium payments are invested by the insurance company on your behalf. This builds up a cash value, which you can use in several different ways.
  • You can take out a loan against the cash value of your policy, use the cash as extra retirement income, or subsidize expenses like college tuition.
  • You may also be able to cancel, or surrender, the policy and receive the cash value as a lump sum.
  • With all permanent life insurance policies, the cash value is different from the policy's face amount.
  • Cash value is the amount available if you surrender a policy, while face amount is the money paid by the insurance company at your death.
  • Premiums for permanent life insurance are generally higher than term life insurance because of the cash value. However, the younger you are when you buy the policy, the lower your premiums will be.