Whole life is actually the oldest form of modern life insurance. Even though some historians say that life insurance may date back to Ancient Roman “burial societies,” the first modern policies date back to the early part of the 18th century. Since that time, life insurance has evolved quite a bit, and today’s consumers have lots of choices.
To understand different types of life insurance, it might help to compare whole, term, and universal life:
- Term life insurance: Term gets its name because it lasts for a certain length of time, or term. You may have seen 10, 20, or 30 year term policies.
- Whole life insurance: Unlike term, whole life stays in force for the insured person’s lifetime.
- Universal life insurance: Universal life is the newest type of life insurance, and it, like whole life, is permanent life insurance. However, universal life has both flexible rates and a flexible face value, but whole life has fixed rates and a fixed death benefit.
Note that when we say that permanent policies, like whole and universal life, stay in force for a whole lifetime, we mean that they stay in force as long as the premiums get paid or the policy has been paid up.
Instant Whole Life Insurance Quotes Online
You know you need life insurance, and we can help you compare the best whole life insurance companies with our quick and easy Internet quote forms. Just enter your local ZIP code to begin shopping for top insurers in your town or city. You can also receive instant online life insurance quotes for term or universal life policies.
Advantages of Whole Insurance?
Term life gets a lot more attention these days because whole life insurance rates by age are more expensive. This is because term is temporary and has no cash account. Once a term policy ends, the contract is worthless.
Any money that gets paid into whole life in excess of the amount needed to pay for actual insurance goes into a cash account. Insurers may also pay a return on this cash account based upon a fixed interest rate or some market index. As this cash account grows, it might be possible to use the policy as an asset while the insured person is still alive.
These are some ways to use the value of whole life while still alive:
- Cash in the policy or borrow against it based upon the value in the cash account.
- Senior citizens may be able to sell their permanent policy to an investor for a percentage of the death benefit, and this is likely to be greater than the cash value of the account.
Of course, the main purpose of any life insurance policy should be to provide a death benefit to the insured person’s heirs when they pass away. Still, there may be circumstances when the policy becomes valuable because of the benefits that it can provide while the policy owner is still alive.
As an aside, the insured person and policy owner do not have to be the same individual, but they often are. For example, adult children are free to purchase a policy on their elderly parents with their parent’s cooperation. The parents are insured, but the adult children own the policy, pay the bills, and are usually named as the policy beneficiaries.
Term Life vs. Whole Life
Even though whole life insurance rates by age will be higher than they are for term, rates always increase by age for every kind of life insurance. By purchasing whole life, people can lock in one fixed rate for the rest of their life. Meanwhile term policies end, and the insured people might have to seek a new policy when they are older making it more difficult and more expensive to insure.
In some cases, whole life policies can get paid off over a period of years, so insured people can enjoy lifetime coverage without worrying about making more payments. While cheaper term policies may provide a good solution for folks who need to buy larger amounts of coverage at a lower price, whole life has advantages for some families.
Whole Life vs. Universal Life
Because universal and whole life are both permanent policies and can grow a cash value, they are similar. But universal life is both more flexible and more complicated.
With universal life:
- Monthly payments, the cash account, and even the death benefit can all change over the policy’s lifetime.
- The difference between the cash account and the account that pays for insurance is more obvious with universal life, so universal life is often considered as more of a “savings” product than whole life. Note that insurance agents are not supposed to refer to any life insurance products as investments even if they can can grow a cash account.
- To help grow the cash balance, insurers may offer a fixed return rate or a return tied to a market index like the S&P 500. In years when the market index declines, there will be a minimum guaranteed return on the cash balance on universal life purchased from an insurance agent. Some whole life policies are similar.
- Policy owners will have minimum, target, and maximum payments that they can pay. This allows them to adjust their insurance and bills when needs change.
Who purchases universal life? Typically, people purchase universal life when they want more control and flexibility, and they do not mind exercising more control over their insurance and cash account. Whole life is a lot simpler, and it is usually purchased with the death benefit mostly in mind.
Whole Life Insurance For Seniors
Some term companies offer to insure people in their sixties and seventies, but they generally only accept older folks who are in very good health for their age. Also, many senior citizens have gotten to the point where they have already outlived a 10, 20, or 30 year term policy, and they have concerns about outliving another one.
Even if whole life insurance quotes for seniors are more expensive than they are for younger people, many of the best whole life insurance companies are very eager to court the business of baby boomers and senior citizens. These companies have even developed senior life insurance products, sometimes called burial policies, that are easy for middle-aged and elderly people to apply for. Because the face values are fairly low, prices are affordable for many older folks and their families.
These are some things to know about senior whole life insurance:
- Applications: These are no exam life insurance policies, and the applications are usually very simple. Some plans only require the answers to a few health questions or even ask no health questions at all.
- Face values: The death benefits of these plans usually range from about $5,000 to $35,000. Larger whole life policies may be available for senior citizens, but the insurer will probably need more answers to medical questions and maybe even a life insurance exam.
- Underwriting: With senior life, minor health issues will not keep applicants from getting accepted. Guaranteed acceptance policies will not consider medical issues at all.
Why answer health questions on life insurance applications? It is better to qualify for senior whole life insurance by answering health questions. Rates will be lower and the proceeds will be immediate. When insurers don’t ask health questions, they will impose a waiting period of two or three years before fill face value will be paid.
If the insured person dies before this waiting period ends, the policy may either refund premiums or pay some percentage of the face value. Policy owners won’t lose any money, but it is more valuable to have a policy with immediately payable proceeds.
Get Instant Whole Life Insurance Quotes Online
Before you decide which type of life insurance to buy, you probably want to find out how much different types and amounts of insurance will cost. Costs will vary because of your age, health, city, the size of the policy, and the insurer that you choose to use. One thing to keep in mind is that most people think that life insurance costs more than it actually does.
We have a quick and easy quote form that will help you view multiple term or whole life insurance quotes right from your personal computer or mobile device. Just enter your ZIP code to start comparing your life insurance options. This online insurance tool should help you find the best life insurance for you and your family.