Whole life insurance is one type of permanent life insurance that can provide lifelong coverage. It provides a variety of guarantees, which can be appealing to someone who doesn’t want any guesswork after buying life insurance.
Whole life insurance combines an investment account called “cash value” and an insurance product. As long as you pay the premiums, your beneficiaries can claim the policy’s death benefit when you pass away.
Whole life insurance offers three kinds of guarantees:
- A guaranteed minimum rate of return on the cash value.
- The promise that your premium payments won’t go up.
- A guaranteed death benefit that won’t go down.
While it can sound like a good choice, there are often better options for individuals who want insurance that will last as long as they live.
Some people use the phrase “whole life insurance” very broadly to refer to any type of life insurance that can provide lifelong coverage. But there are other types of permanent life policies that can provide lifelong insurance. These policies work very differently from traditional whole life insurance and include:
- Universal life insurance.
- Variable life insurance.
- Survivorship life insurance.