What Is Whole Life Insurance?
Whole life insurance is a permanent policy that lasts your entire life and builds cash value at a guaranteed rate set by the insurer. Part of each premium funds the death benefit and part grows the cash account you can borrow against. Premiums are level but significantly higher than term for the same death benefit.
Why it matters
The cash value can serve as a forced savings or emergency fund, and the guaranteed death benefit appeals to those with lifelong dependents or estate-tax concerns.
Common confusion
Whole life is not an investment first — the credited rate is usually low. It is insurance with a savings sleeve, not a stock or bond substitute.
Frequently Asked Questions
How does the cash value work?
A portion of each premium is credited to cash value that grows tax-deferred. You can surrender the policy for the cash or borrow against it, but loans reduce the death benefit if unpaid.
Is whole life ever worth it?
For high earners needing permanent coverage or certainty, yes. For pure income protection, term is cheaper. A fee-only advisor can help compare.