Whole Life Insurance

What is it? Whole life insurance is permanent insurance purchased from an insurance company. Life insurance policies are generally long-term contracts providing death benefit protection and tax-deferred cash value accumulation.

Why would you want it?

Whole life insurance might be right for you if you want to leave money for loved ones to replace lost income when you die. Life insurance proceeds can also provide money at your death for a number of reasons: for a charity, or for liquidity in your estate to provide for a more orderly transfer of wealth. Whole life insurance can also provide cash value you can access while living — “living benefits.”*


Guaranteed1 death benefit • Premium guaranteed1 never to increase • Guaranteed1 tax-deferred cash value growth • Opportunity for additional cash value growth through dividends2 • Protection from creditors3 • Tax-free access to cash value via loans or withdrawals* • Generally income tax-free death benefit


Loans and withdrawals reduce the death benefit and may be taxable if the policy is an MEC.4 Taxable distributions from an MEC may also be subject to a 10% IRS penalty tax if the policy owner is under age 59½. Loans also accrue interest. • Initial premiums are generally higher than term insurance. • Underwriting is usually required; the premiums you pay are based on your health, gender, age, amount of coverage, and type of policy. • Available cash value may not be equal to or greater than total amount of premiums paid.

 *Loans against your policy accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest.

1All guarantees are based on the claims-paying ability of the issuer.

2Dividends are not guaranteed.

3Varies by state.

4The term “modified endowment contract,” or “MEC,” is used in tax law to describe a life insurance policy where the premiums paid exceed a specified premium limit (referred to as the 7-pay limit) during the first seven years of the policy (or for seven years after a “material change” to the policy).