Whole life insurance provides financial protection that lasts your entire life. Unlike term life insurance which covers you for a set period, whole-life policies pay a death benefit whenever you pass away. These policies also build up cash value that you can access while still living. Whole life insurance works as part of a sound financial plan.
Imagine you could purchase life insurance that not only provides money for your loved ones when you pass away but also builds up savings you can use while still living. Sound interesting? Let me introduce you to the best whole life insurance providers to explore in 2024.
A Quick View on the Whole Life Insurance
Whole life insurance is a special type of permanent policy that offers lifelong protection. That means it pays out a death benefit to your beneficiaries whenever you die, whether next year or at age 100. So it’s guaranteed coverage for your entire life.
Unlike term life insurance that covers you for 10, 20, or 30 years, whole life insurance never expires as long as you keep paying the premiums. Pretty cool, right?
But wait, there’s more! Whole life insurance has some extra features that make it very unique. One is cash value. This means a portion of the premiums you pay over time get set aside in an account that earns interest. So you end up building up savings that grow on a tax-deferred basis.
The cash value belongs to you. You have options like being able to withdraw or borrow some of the money while alive for major purchases, medical bills, retirement income, or other needs. That’s what makes whole life insurance work as an asset within long-term financial plans.
Does this type of permanent protection and potential cash growth appeal to you? Ask more questions below and let’s continue our conversation about how whole life insurance could fit into your specific situation.
How Whole Life Insurance Works
With whole life insurance, you pay a monthly premium that stays the same over the years. Part of each payment goes toward the death benefit that will go to your beneficiaries. Another part of the premium builds up a cash-value fund that earns interest. The cash fund belongs to you, so you can borrow against it or withdraw some money if needed.
The premiums and death benefit payout with whole life insurance remain fixed throughout the policy. This provides a reliable way to pass assets to heirs while slowly growing retirement savings.
Factors To Consider
Your age and health status determine eligibility and premiums for whole life insurance. Insurers also differ in their financial strength and customer service reputations. So compare a few top-rated companies before deciding on a policy. Consider getting quotes for both whole life and term life insurance to see which better fits your budget.
Types of Whole Life Policies
There are several varieties of whole life insurance:
- Traditional – Spread premiums over the entire lifespan
- Limited-pay – Shorter payment terms such as 10 or 20 years
- Single premium – One lump-sum payment covers life
Benefits and Drawbacks
Benefits of whole life insurance include:
- Lifelong death benefit
- Cash value savings
- Fixed, predictable premiums
- Tax-deferred growth
- Higher premiums than term life insurance
- Lower cash value growth than regular investments
- Complex policy terms
Whole Life Insurance Case Studies
Maria, age 28, bought a participating whole-life policy that paid dividends to policyholders. She paid $150 per month while the death benefit rose from $250,000 to $500,000 over 30 years. At age 58, Maria was diagnosed with cancer. She withdrew $20,000 from her policy’s cash fund to help pay medical bills before passing away at 60. The death benefit helped pay funeral costs and replace lost income for Maria’s family.
On the other hand, Mark, age 32, realized that term life insurance better matched his needs. As a young freelancer without kids, Mark wanted only temporary coverage for the next 20 years until he built more assets. The lower term life premium allowed Mark to invest spare cash into his business.
The Best Whole Life Insurance Providers For 2024
Guardian: Best for Applicants Living with HIV
Guardian offers specialized underwriting for people living with medical conditions like HIV. Where other insurers may decline coverage or charge very high premiums, Guardian provides competitive rates thanks to their expertise in covering higher-risk applicants.
Policyholders can receive personalized service and access policy options like riders for accidental death or disability. Guardian is a mutual company, meaning they are owned by policyholders rather than investors.
MassMutual: Best for Cash Value Growth
Of all the major insurers, Massachusetts Mutual Life Insurance Company (MassMutual) is known for paying higher dividends and interest rates on the cash values within their whole life insurance policies.
This allows the cash value funds within the policy to achieve significantly higher potential growth over decades. MassMutual also enables extreme flexibility to customize coverage amounts, premium payments, riders, and other policy specifications to meet each person’s financial situation and goals.
Northwestern Mutual: Best for Blended Term
A unique benefit of Northwestern Mutual’s whole-life policies is the ability to blend in term insurance coverage segments. This approach essentially combines whole life and term insurance into one hybrid policy.
Blending term insurance allows the policyholder to pay lower premiums upfront while still building up lifelong cash values. It makes the policy more affordable when money may be tight. As financial situations improve over time, clients have the option to convert the term segments into permanent whole-life coverage.
New York Life: Best for Rider Options
New York Life Insurance Company offers an extensive array of over 30 optional riders to attach to whole-life policies at affordable rates.
Riders customize the policy by expanding coverage for specialized needs like providing long-term care, protecting retirement income, covering disability, or addressing chronic and terminal illness costs. With so many riders to choose from, policyholders enjoy exceptional flexibility to tailor coverage for their unique circumstances and concerns.
State Farm Life: Best for Customer Satisfaction
Year after year, top research firms and consumer review sites give State Farm consistently high ratings for customer service experience and efficient claims handling processes. State Farm makes the whole life insurance purchasing process simple and streamlined.
Policyholders can easily manage their policies online or connect with knowledgeable local agents for personalized guidance. All State Farm life insurance products are backed by strong financial strength to deliver promised benefits now and decades down the road.
AARP: Best for Smaller Coverage Amounts
AARP offers low-cost whole-life insurance coverage to American Association of Retired Persons members. Underwritten by New York Life, these simple, affordable policies work well for seniors needing less than $25,000 to cover final expenses and burial costs, or small death benefit amounts.
AARP does not allow smoker rates or pre-existing condition clauses that could limit eligibility or increase premium costs. Applicants must be aged 50 to 85 for approval but can renew policies annually beyond age 85.
Tips for Purchasing Whole Life Insurance
Follow this checklist when shopping for the best whole life insurance policy:
- Determine the needed death benefit amount
- Research and compare different insurance companies
- Learn the differences between policy types
- Review fine print for exclusions and limitations
- Ask about health discounts and special policy “riders”
- Negotiate personalized premium payments
Doing your homework takes time but leads to the right policy at the optimum price.
Frequently Asked Questions
Q: Why does whole life insurance cost more than term insurance?
A: You pay higher premiums in return for lifelong coverage and growing cash value funds that term life policies lack. Whole life premiums also remain level compared to rising term life rates as you age.
Q: Can I change my death benefit amount?
A: Many whole-life policies allow you to increase or decrease the death benefit later on to match changing life circumstances. But doing so would likely adjust your premiums and cash value too.
Whole life insurance provides permanent coverage plus cash savings that appeal to people wanting guarantees. While whole life insurance costs more at first, over decades it can pay dividends, both financially and for your family’s peace of mind.