Trusted Quote logo

Whole Life Insurance

"Elementary, my dear Watson." —The Return of Sherlock Holmes (1929)

Cartoon illustration of a detective
Whole life
insurance =
whole life coverage. No mystery here.

You don’t need Sherlock Holmes to deduce that fact that “whole” life insurance covers you for your entire life.  You might need him to figure out who first popularized the quotation above—it doesn't appear anywhere in anything Sir Arthur Conan Doyle ever wrote.   

Here's what whole life insurance offers:

  • Protection throughout your life
  • Guaranteed monthly payment & death benefit amount
  • Cash value account that accrues interest
  • Ability to withdraw or borrow against your cash value

If you want permanent coverage for the rest of your life, a whole life policy is the simplest way to make that happen.  It’s solid and steady, the rock of life insurance. Trusted Quote can find you the most affordable policy from the top-rated carrier. You'll have the best available rates at your fingertips in seconds. Plus, you can reach out for help by phone (800-823-4852) or live chat if you need it. 

We've helped more than half a million families get coverage over the past 40 years...are you next?

Click Here for Life Insurance Quotes!


What are some features of whole life insurance?

Let's start with a basic definition:

Trusted Quote Whole life insurance pays an agreed-upon amount of money to a person’s beneficiaries when he or she passes away. The policy also contains a cash value account that can be used for investment purposes.

This type of policy provides specific benefits that include:

  • Protection until the day you die
    • Compare to term life insurance, which covers you for a particular period of time only
  • Guaranteed monthly payment amount
  • Guaranteed death benefit amount
    • Compare to universal life insurance, where good or bad investment choices can change the death benefit amount
  • Cash value account
    • Tax advantages
    • Earn interest that increases your policy's value

Who should buy this type of policy?

The best part about this type of policy is that it works for a wide range of individuals and families.

  • Married? Protect your spouse and children after you pass away.
  • Single? Start building your cash value account tax-free.
  • Retired? You can pull funds, tax-free, from the cash value of your account to supplement retirement income.
  • Own a small business? Borrow against or withdraw your cash value funds to support or expand your business.
  • Interested in giving to charity? Select your favorite charity as your beneficiary.

What does it cost?

As Hamlet and numerous Memphis-style barbecue champions have said, “Ay, there’s the rub.” 

You’ll pay more than you would for a term policy, there’s no question about that. Your rates will depend on your age, sex, health, state of residence, and amount of coverage you want.

But the upside is that your payments will never go up—never.  Not if you take up smoking, not if you have a stroke, not if you lose a foot in a tragic lawnmower accident like that guy in Season 3 of Mad Men. No matter what happens later in life, your monthly payment and your death benefit are 100% guaranteed.


What is a "cash value" account?

Walt Disney and Sleeping Beauty Castle
Disney used his policy's cash value to help build Disneyland.

Cash value is a feature that turns your life insurance policy into a sort of investment vehicle.  As you make your monthly payments, a small portion of that money is set aside in a cash value account that grows tax-deferred at a set interest rate as long as your policy remains in force.

Your cash value accumulates over time, like an enforced savings plan.  As an example, Insure.com posted a scenario that shows you how fast your cash value might be able to pay for the entire policy. If a 35-year-old non-smoker in good health bought a $100,000 whole life insurance policy from New York Life, the cash value account attached to his policy would be able to pay his premiums beginning in the 17th year of his policy.  If he bought this policy at age 35, he’s home free at age 52.  Not too shabby.

You can also withdraw some or all of the cash value and use it for virtually anything you want.  In most cases, your withdrawal will be tax-free up to the amount you’ve paid in monthly payments.  (Be sure you ask your agent whether any withdrawals reduce your death benefit—each policy will be slightly different.)

Another interesting feature of a cash value account is the ability to take a loan out against it. You can do this at a much lower interest rate than a bank loan or credit card loan. If you can’t pay it back (or don’t want to), the amount you borrowed will be deducted from the death benefit your beneficiary receives when you die. You can't get this kind of financial flexibility from a regular bank loan or line of credit.

If flexibility combined with lifelong protection sounds good, click here for an instant quote!


What should I do with the money?

No pressure, but Walt Disney borrowed against the cash value of his life insurance account to help fund the construction of Disneyland. And, well, sales at Disney Parks and Resorts totaled $3.1 billion in the 2011 fiscal year.

So don’t be a slacker and buy a collection of vintage Ed Hardy trucker hats. You can send kids to college, pay off a mortgage, start a small business or expand the small business you already have.


Does my beneficiary get the cash value and the death benefit?

No.  Most whole life policies only pass on the death benefit to your designated beneficiary.  The cash value portion of your policy is a “use it or lose it” feature. If you want your family to receive cash value plus the death benefit, get a universal life insurance policy.  Some policies may allow you to pass on the cash value to your beneficiaries, but you can expect to pay for more the privilege.


I don't need a cash value account. Should I just buy a cheaper term life policy?

It depends on what you’re after.  If affordable coverage is your only concern, term life might be better for you.

If you’re thinking you could buy the cheaper policy, invest the difference between a term policy and a whole policy and come out ahead, you should think hard about how much of a return you’re likely to get on the invested savings.

Here’s what we mean: the cash value portion of a whole life insurance policy is going to increase by a defined percentage as you keep making monthly payments.  Unless you know you can beat that percentage, you’re better off with the cash value than a do-it-yourself investment portfolio.  

One example, calculated by James Hunt of the Consumer Federation of America, showed that you’d need to beat a 4.5% increase for your personal investment to equal what you’d gain with a cash value account after 20 years. Of course, the exact rates of interest are going to vary by policy, so this isn’t an ironclad guarantee.  However, if you think about the average return you’ll get on a money market account or CD, it’s probably not going to be over 3%. 

Just for comparison’s sake, in November of 2012, we searched for the best available rates on a 5-year jumbo CD returned a max of 1.85%.  That is not even in the same ballpark as 4.5%.  Heck, it’s not even in the same zip code.   


You said something about tax advantages. What are they?

There are three main ways your whole life insurance policy helps you save on taxes:

  • Your beneficiary will not have to pay federal or state income tax on the death benefit.
  • The cash value of your policy is not taxed until you take money out of it. This makes it grow faster, since there’s more in the account to generate interest.
  • If you take loans against the cash value of your account, that loan amount is not taxable.

Are there options for customizing my policy?

Why, yes there are.  Most of them have to do with sizing your monthly payment.  Here are just a few:

  • Single premium
    • You pay for the entire policy in one lump sum. You can do this if you cash out a 401k, receive a pension payoff, or win Powerball.
  • Modified premium
    • Your payments start at a lower, more affordable rate and increase at a stated date.
  • Graded premium
    • Your payments start at a lower, more affordable rate and gradually increase over time.
  • Participating
    • You receive a dividend from the invested portion of your account.
  • Adjustable
    • You can adjust the amount of both your monthly payment and death benefit.
  • Variable
    • The interest earned on your cash value account isn’t set—instead, that cash value is invested. Depending on your policy and provider, you may be able to do the investing yourself, or have your insurer spread the money across their investment holdings (usually in things like bonds, money market accounts, equity funds, etc.).  Your interest earned will change with the market and investment strategy.

You can talk to us about any of these options and get a quote customized for your family's needs. Call us at 800-823-4852!


I like what I see! What are my next steps?

  • Get a free quote just by clicking the big orange button below.
  • Call us at 800-823-4852 and we’ll answer any questions you have and walk you through the process step-by-step. Get help Monday through Friday, 8 am to 8 pm, Pacific time.

Click Here for Life Insurance Quotes!

Sources: 
Orlando Sentinel: Disney Sees Record Profit Amid Gains at Theme Parks, TV Channels
Insure.com: Cash Value

What does Sir Arthur Conan Doyle have to do with life insurance?
As a young doctor struggling to make ends meet, Conan Doyle also wrote ad copy for a life insurance company. When the compilers of Arthur Conan Doyle: A Life in Letterswere going through Conan Doyle’s letters, they found the only known example of his ad work—the Gresham Life Assurance Company ad.  (In England, “insurance” is called “assurance,” just like “cookies” are “biscuits,” “trucks” are “lorries,” and “gas” is “petrol.”  We have no idea what "bangers and mash" are.  Sounds dodgy to us.)

Disclaimer:
This website provides information about insurance products. This information is not intended to help you avoid paying taxes or IRS penalties.  Always consult your tax advisor for specific tax-related questions and problems.


About Trusted Quote

For over 40 years, our company has helped half a million American families protect their future with life insurance. We provide fast, free quotes for life, disability, long-term care insurance, and more.

Latest Tweets

@TrustedQuote - The latest Health & Wellness Daily Digest! https://t.co/LLZzTGFM2c Thanks to @RedHeadedPatti @simosimotw @mb...

@TrustedQuote - The latest The Life Insurance Daily! https://t.co/jsQEJYkMyn Thanks to @Ray_Yizzle #technology #smm

@TrustedQuote - The latest Health & Wellness Daily Digest! https://t.co/4MRju4siV0 Thanks to @NdzaviDerrick @systemaTYO @Lau...

Follow Us!

Facebook social icon Youtube social icon Twitter social icon Google plus social icon

Click here for Live Help

Need immediate assistance? Call 1-800-823-4852 from 8am to 5pm PST Monday through Friday.

Copyright 2002-2013 Pinney Wholesale Insurance Services - All Rights Reserved 2266 Lava Ridge Court, Roseville, CA 95661


*Comparison of each carrier’s best published rates for a
10-year level term policy, 30-year-old non-smoking female


^Represents 10-year level term life insurance rates for 40-year-old female,
in good health, no tobacco, residing in Ohio.

R. Jan Pinney CLU, ChFC is a licensed life insurance agent in all states and the District of Columbia. The following agent license numbers are provided for R. Jan Pinney as required by state law: CA agent #0440057, LA agent #291116, MA agent #1674866, MN agent #20270113, UT agent #58330, agent R. Jan Pinney, DBA Pinney Insurance Services. Commercial use by others is prohibited by law. This site provides term quotes. Each rate is a quote based on information provided by the carrier. No portion of Trusted Quote may be copied, published, faxed, mailed or distributed in any manner for any purpose without prior written authorization of the owner.

Click to Compare Life Insurance Rates! Get a Free Quote