What is Whole Life?
Guaranteed whole life will give you a level premium and a level benefit, but will cover you to age 120 or the day you die, whichever comes first. It is more expensive than Term Life because it does much more than just pay the cost of insurance and feeswhich is the nature of a term. Whole life earns interest and builds cash value. You can borrow against it in an emergency and, after the first few years, can cash it in if you decide you no longer need it. request rates >>

If you pay the premium for about 20 years, you will also have enough to convert it to a single premium whole lifewhich means you will exchange the cash for a paid up policy that could have a higher face value than the original policydepending on your age. If you do not medically qualify for a single premium whole life, you can also convert a whole life policy into an annuity, thereby adding to your retirement assets while still covering your final expenses.

A True Story
Recently a client refused to purchase term life insurance, saying that after thinking it over, he decided he was better off just to put his money in a savings account himself for final expenses. He is correct about one thing. At his age, in 20 years, he will have paid $24,000 and if he does not renew the policywhich will be expensive to dohe will have paid for 20 years of security with money that someone else is making a profit on.

Refusing life insurance altogether, however, is short sited. A final expense savings account may be fine, providing he either has enough time to save the amount necessary to pay for final expenses, possible taxes due, remaining bills, and leave something for a spouse to live on. Most of us can't save enough money to take care of a surviving family member and also build for our own retirementa necessary act of planning in these days of shrinking social security and group retirement benefits. Even more importantly, it's often the people who think they will just "save for their own burial" who either die unexpectedly, leaving a family to survive on their good intentions, or have other demands on their money and never do save enough to take care of the many things that seem to accompany a death.

The client's concern is fully understood. He doesn't want to put money into something and have nothing to show for it later on. One must wonder if such a person also puts money into a savings account in case the house burns downrather than pay for fire insurance, or in large HSA rather than pay health insurance. Nevertheless, there is a way to make sure of a guaranteed return on life insurance without dying during the period of a term. Either the client or a beneficiarysomeonewill definitely get the money if you simply purchase a "whole life" policy.