What are the best whole life insurance policies?
Whole life insurance offers policyholders lifelong protection and the ability for their policy to accrue cash value. The cost of a whole life insurance policy tends to be significantly higher than term life insurance, as your premiums will go to both a guaranteed death benefit and a cash value component.
Here’s how to find the best whole life insurance policy for every situation.
Types of whole life insurance policies
There are several types of whole life insurance policies. The best whole life insurance for you will depend on your financial goals.
Policy types include:
Traditional Whole Life Insurance
Whole life insurance is a type of permanent life insurance policy that guarantees lifelong coverage and a cash value component as long as premiums are paid.
In addition to paying out a death benefit when the policyholder passes away, whole life insurance also offers the ability to accrue cash value. The cash value can either add to the value of your death benefit or be used through withdrawals or loans, which can sometimes even help pay monthly premiums.
It’s easy for policyholders to budget for whole life insurance since the premiums are level (they won’t change), and many whole life policies offer a guaranteed rate of return on the cash value.
Final Expense Life Insurance
Final expense insurance is designed to minimize financial stress for loved ones by taking care of certain final expenses, like a funeral, a burial, or estate taxes.
These policies may require a few questions about health but won’t require a medical exam. While the coverage amount on final expense life insurance tends to be lower than insurance policies with a medical exam, premiums may be higher than other types of whole life insurance.
Participating Whole Life Insurance
A participating whole life insurance policy means policyholders can earn dividends based on the insurance company’s performance.
While dividends can be accepted as a cash payout, you can choose to apply them directly to increase your policy’s cash value or death benefit. It’s worth noting that dividends are not guaranteed.
Non-Participating Whole Life Insurance
A non-participating whole life insurance policy means policyholders will not receive dividends, regardless of the company’s profitability.
As a result, non-participating policies may have slightly lower premiums than participating whole life insurance policies.
Limited Payment Whole Life Insurance
With a limited payment whole life policy, you’ll only need to pay premiums for a set number of years or until a certain age. Limited pay life insurance can be good for younger applicants who want the lifetime protection of a whole life policy but don’t want to pay premiums after they reach a certain age or retire.
Universal Whole Life Insurance
Universal whole life insurance offers flexibility to pay higher or lower premiums to adapt to your changing financial needs. As long as you meet the minimum annual premium, the policy remains active for your lifetime.
The cash value in a universal life account grows at a variable interest rate with a guaranteed minimum.
Variable Whole Life Insurance
Variable life insurance offers greater earning potential for your cash value account. Since variable life cash value can be invested in a variety of sub-accounts, like a mutual fund, policyholders could see higher returns if the market is performing well.
Like a traditional whole life insurance policy, a variable life policy will keep level premiums and death benefits throughout the policy. Given the nature of investments, the cash value component can fluctuate based on the performance of those investments.
Children’s Whole Life Insurance
Most life insurance policies for kids are whole life insurance. The primary benefit of these policies is that they can provide lifetime coverage as long as premiums are paid, regardless of any medical issues that may arise later in a child’s life.
Children’s whole life insurance typically has low coverage amounts but may have the option to increase the policy amount as the child gets older, where many insurers will not require a new medical exam while expanding the policy coverage.
Best whole life insurance policy for couples
Couples may decide to get whole life insurance policies as individuals or choose a joint life insurance policy.
A joint option enables couples, typically spouses or domestic partners, to choose whether the policy pays out on a first-to-die basis or second-to-die, meaning parents can decide if the policy will pay out after one spouse passes away or if it should provide a death benefit to beneficiaries after both parents die.
Best whole life insurance policy for new families
New families are often focused on how to provide support to children and a surviving spouse if something happens to either parent. A traditional whole life insurance policy can perform double duty as a way to provide loved ones with a tax-free death benefit if the policyholder passes away and as an extra savings vehicle the family can use later on.
Best whole life insurance policy for families with teens
Parents of teenagers may be thinking about paying for college. A standard whole life insurance policy can be a great way to set aside extra savings and use the policy’s cash value to pay for college. If the policyholder passes away, the surviving spouse could also use the death benefit to pay for education.
Another advantage of setting aside money in whole life is that this money often isn’t considered in financial aid calculations, meaning a large cash value in a whole life insurance policy won’t negatively impact your child’s chances of receiving aid.
Best whole life insurance policy for seniors
Final expense insurance is a type of whole life that seniors can purchase up to age 85 with some insurers.
These policies are typically used to cover funeral and burial expenses, relieve outstanding debt, pay end-of-life medical expenses, or cover estate taxes. Final expense policies tend to be costly and offer a lower coverage amount, but they can be worth it for seniors with health issues that prevent them from taking a medical exam and qualifying for a regular whole life policy.
Best whole life insurance policy for investors
Many investors like to be in control of how their money is invested. While traditional whole life insurance policies have a guaranteed return, variable life insurance is a kind of whole life policy that enables investors to choose their underlying investments.
However, as with all investments, variable life insurance policies are riskier since the cash value in the account can fluctuate as the markets do.
Best whole life insurance policy for dividends
A participating whole life insurance policy is offered by a company that pays dividends based on company performance.
Often, these companies are owned by the policyholders and aren’t publicly traded, which is sometimes referred to as a “mutual” company. While dividends aren’t guaranteed, they benefit from being tax-free, as receiving dividends is viewed as a return of principal. Dividends are often provided in addition to the cash value of a typical whole policy, offering policyholders two ways to add value to their policy.
Best whole life insurance companies
The best whole life insurance companies will vary depending on the type of whole life insurance policy you need. For example, the best whole life insurance company for someone looking to earn dividends may be a mutual life insurance company with a track record of issuing dividends to shareholders. On the other hand, a senior looking for a policy to cover their funeral expenses may find that companies specializing in final expense whole life insurance are best.
It’s important to review various companies and the types of policies they offer to determine the best whole life insurance company for what you need. eFinancial allows you to quickly connect with an agent to review whole life policy quotes across the most reputable insurers, including Mutual of Omaha, Fidelity Life, AIG, Prudential, TransAmerica, and more.
Find the best whole life insurance policy for you
eFinancial has many whole life insurance policy options and can help you quickly gather quotes from multiple insurers to find the best whole life insurance policy for you.
If you need assistance finding the right policy option or want to connect with the best whole life insurance companies, the eFinancial team is here to guide your search.