Five Questions To Ask When Considering Purchasing A Whole Life Insurance Policy

A young woman smiles after learning what types of questions she should consider when shopping for whole life insurance.

When shopping for life insurance, there’s a chance you’ll consider both term and whole life insurance policies. While term life insurance is often the more affordable option, whole life insurance can give you a set amount of coverage for as long as you live. When considering life insurance, it’s a good idea to weigh out your options, so we put together some of the top questions to consider when it comes to whole life insurance policies.

Whole Life Insurance Explained

Whole life insurance coverage is an excellent option if you seek lifetime coverage and predictable premiums that never increase. In addition to those two advantages, whole life insurance also accrues cash value.

1. Is whole life insurance or term life insurance a better option for me??

Both term life insurance and whole life insurance have their advantages and considerations. Our term life insurance vs. whole life insurance guide can help you better understand the two types of coverage and weigh your options, but whole life insurance might be the right fit for you if:

  • You’re looking for lifelong life insurance coverage.
  • You’re the parent or guardian of a child with special needs.
  • You’re hoping to provide an inheritance when you pass.
  • You want to maximize a pension.
  • You have a high net worth.
  • Your budget allows for more expensive premiums.

2. Can I afford whole life insurance premiums?

Whole life insurance often costs much more than term life insurance due to the cash value savings account that it provides. Additionally, whole life insurance interest rates and death benefits are guaranteed for as long as you live. Therefore, you might be able to receive a discount on a whole life insurance policy by paying an annual premium instead of monthly. Still, the cost of whole life insurance is often significantly higher due to the benefits that come with it. Therefore, if you’re looking to buy whole life insurance, it’s important to weigh your options and ensure you can pay the higher monthly premiums that come with it.

3. Do I need a permanent death benefit?

You may want to consider a permanent death benefit if the needs of your loved ones cannot be met by the benefits of a term life insurance policy. As a quick reminder, a permanent death benefit is coverage that is written to cover your entire lifespan. So whether you die in the next few years or 50 years from now, the benefits are paid out to your beneficiaries. 

 A permanent death benefit is typically favored when:

  • You have an estate or inheritance that your family would be expected to pay taxes on if the unexpected were to happen to you.
  • You’re a parent or guardian of a special needs child that is dependent upon your income.
  • You are a business owner and want to ensure your business partners/beneficiaries can continue running said business upon your passing.

4. How Much Whole Life Insurance Coverage Do You Need?

How much life insurance coverage you need will depend on your long-term financial responsibilities, your income, the cost of final expenses, and more. Our life insurance calculator is a good place to start when figuring out how much coverage is right for you and your family.

5. Do I Understand The Cash Value Of A Whole Life Insurance Policy?

One of the main advantages of a whole life insurance policy is the cash value, which increases each time you pay into your policy. In insurance terms, the cash value is the portion of your policy that accrues interest and can be borrowed against. You can often borrow against the whole life insurance cash value tax-free or cancel your coverage to receive all or part of the cash value once it reaches a certain amount. It takes many years to build up a substantial cash value, though, and if you were ever to decide you can no longer afford the policy, you could potentially be out of that money with little to no cash value to take with you.

SelectQuote Can Help Answer Your Whole Life Insurance Policy Questions

Understanding the benefits of different types of life insurance can seem overwhelming, but at SelectQuote, we can help. Whether you have questions about whole life insurance policies or are looking into your options, we can compare coverage and costs from some of the most trusted life insurance companies in just minutes.

We do the shopping. You do the saving.