How whole life works
The premium is set when the policy is issued and generally does not increase. The policy accumulates cash value on a schedule defined in the contract. You can usually borrow against that cash value or surrender the policy for it, but loans and withdrawals reduce the death benefit and can have tax consequences.
The trade-offs
For the same death benefit, whole life costs considerably more than term because it is designed to pay out eventually rather than only if you die within a set period. People usually choose it when the need is permanent.
- Covering funeral and final expenses no matter when death occurs
- Leaving a guaranteed amount to a spouse, child or charity
- Providing for a dependent who will need lifelong support
Smaller whole life policies
Many whole life policies sold to older adults are small, often called final expense or burial insurance. They follow the same rules as any whole life policy but are sized to cover end-of-life costs rather than replace income.
Common questions
Do whole life premiums go up as I get older?
On a traditional whole life policy the premium is fixed at issue. Confirm this in the policy itself, since product designs differ.
Can I take money out of a whole life policy?
Most policies allow loans against the cash value once it has built up. Unpaid loans and interest are deducted from the death benefit.
This page is general information, not insurance, legal or tax advice. Policy terms, eligibility and pricing vary by insurer and state. A licensed insurance agent can explain the specific products they offer.