Whole life insurance provides lifetime protection. Plus, you have the opportunity to build cash value that can be accessed in the future as long as the policy is sufficiently funded.
How does it work?
Whole life provides permanent coverage for your entire life. It is generally more expensive than term life, but the payoff is knowing that you are also accumulating cash value within your policy. This can greatly supplement your retirement income since whole life policies are not subject to early withdrawal fees compared to traditional retirement strategies.³ You can access your money anytime to help pay for someone going to college, refinance your home, or for whatever purpose. Premiums are locked-in based on your current age, and remains the same throughout the life of the policy. In some cases, you can even set up your policy to be paid in full after a set number of years.
- Guarantees are dependent upon the claims-paying ability of the issuing company.
Policy loans and withdrawals reduce the policy’s cash value and death benefit and may result in a taxable event. Withdrawals up to the basis paid into the contract and loans thereafter will not create an immediate taxable event, but substantial tax ramifications could result upon contract lapse or surrender.
Early surrender charges may reduce the policy's cash value in early years.