Life insurance is a type of permanent life insurance. It's also the most common, according to the insurance information institute Like most permanent life insurance policies, whole life offers a savings component, called "cash value," and life-long protection — as long as premiums are paid, whole life provides a death benefit after you die.
WHAT ARE THE BENEFITS OF WHOLE LIFE INSURANCE? Certain aspects of whole life insurance can make it an appealing choice. • Your premiums and death benefit are fixed. • You can withdraw funds or take out a loan. • You have a guaranteed rate of return. Fixed Premiums and Death Benefit In most cases, the premium and death benefit stay constant for the duration of a whole life policy. With fixed premiums and a fixed death benefit, you likely won't have to worry about cost increases as you get older, and your loved ones will know the amount of life insurance proceeds to expect when you do pass on. Cash Value A whole life policy can serve as a source of emergency funds for you if something goes wrong; you may be able to take out a loan against the policy. That's because a portion of each of your premium payments is funneled into a savings component of the policy called the "cash value." Over time, the cash value builds, and you're able to withdraw funds or borrow against it. The rules on how and when you can do that vary by company. And there are guidelines to follow, so that you don't inadvertently reduce the death benefit or create a tax burden1. Guaranteed Rate of Return