Whole Life Insurance- what is it and do you need it?

What is whole life insurance?

Whole life insurance is also sometimes referred to as ordinary life. It is a life insurance policy that is guaranteed to remain in force for the insured’s whole life.

It does not matter where you purchase it, or what company you purchase it from. Whole life insurance is basically the same type of policy as it has been for over 100 years. The primary difference will be what each particular company charges you in premium.

Whole life insurance premiums are fixed at the age of issue. Typically, premiums do not change over the insured’s lifetime.

Unlike term life insurance, whole life insurance also offers a cash value component.

Cash values on traditional whole life insurance policies will earn a minimum guaranteed interest rate. These cash values will accumulate on a tax-deferred basis.

Mutual life companies offer participating whole life policies. These companies typically pay a dividend to the policy owners of their whole life policies.

The dividend can be taken in cash, applied to the cash value, used to lower the premium, or to purchase additional death benefit. Dividends are treated as a return of premium so therefore are not usually taxable to the insured.  Dividends are not guaranteed.

Term Life Insurance versus Whole Life Insurance

Which type of coverage is best? This is seems to be a never ending debate depending on who you talk to. The truth is both term life and whole life insurance can both be used to cover different needs.

Typically, term life insurance is used for a temporary need of protection. This can be anywhere from 5 to 20 years. Term coverage will be much less in premium initially if just comparing death benefit protection.

But, whole life insurance should be considered if:

  • You want to guarantee some of coverage is always going to be in force no matter how long you live
  • Their is a family history of longevity
  • Their is a family history of medical conditions such as diabetes, heart disease or cancer
  • Their is a need to grow cash values on a tax-deferred basis for retirement, college planning, etc.
  • Their is a need to leave an estate or to have cash available for estate taxes
  • Their is a need to leave a charitable donation
  • Their is a need for a grandparent to leave something for grandchildren  

Term life insurance simply cannot guarantee that coverage will be there when you need it. At some point the term will expire or become too expensive to continue.

Only whole life insurance that continues for life can guarantee that tax-free money will be passed on. It is important to remember that life insurance proceeds payable to someone other than the deceased estate are not part of probate. This keeps an insured’s wishes private and out of public record.

Advantages of whole life insurance

  • A level known premium for life of the policy
  • Guaranteed floor on the interest credited to the cash value
  • Cash values accumulate tax-free
  • Cash values are not subject to market risk
  • Policyholders can borrow against cash value at a low net cost
  • Life insurance proceeds are not part of the probate process, unless estate is named beneficiary

Disadvantages of whole life insurance

  • Partial withdrawals or full surrender of cash values are subject to ordinary income tax
  • Typically cash value is low during early years of contract
  • Surrender of the policy during first 10 years often results in surrender penalty
  • Policy loans are not tax-deductible
  • Cash values accumulation is subject to inflation
  • Premiums will be initially higher when compared to term insurance(however, later as term premiums rise the whole premiums remain level)

Case study of whole life insurance needs

Here is a typical situation where whole insurance might be appropriate:

Bill and Susan are a young couple in their mid 30’s. They have two young children. Bill is the primary breadwinner while Susan is a stay at home mom.

After completing a needs analysis, Bill and Susan determine a need of $1,000,000 of protection for Bill and $100,000 for Susan.

Bill would like a level term life policy for 30 years. He figures this will get the kid’s out of college, the mortgage paid off and him close to retirement.

Susan agrees with Bill, but also likes the idea of having some coverage longer than 30 years. She is worried about having no coverage if they are both alive at the end of 30 years.

Susan likes the thought of having some guaranteed insurance money to pay final expenses, leave some money to their charity and plan for their future grand-kids. She also wants to have easy access to cash value for possible college costs.

She understands that term insurance can’t offer these guarantees.

After careful consideration, Bill and Susan decide to purchase three different policies to satisfy their needs. They purchase a $750,000 30 year term plan and a $250,000 whole life plan for Bill. They also decide on a $100,000 whole life policy for Susan.

These plans will provide them with maximum insurance protection during the early years, along with permanent protection for the later years.

Once the 30 year term policy ends the whole life insurance will continue for the remainder of their lives.

How to evaluate whole life insurance needs

The best way to evaluate your needs for whole life insurance or any insurance needs is to speak with an independent agent.

An independent agent with many years of experience will be able to sift thru the numerous whole life insurance plans available and design a plan that is just right for you and your family.

If you would like to speak with an expert in the marketplace, please contact us at 1-888-393-9003 or mike@specialriskterm.com

For a FREE quote

Call, text, email or fill out our instant quote form:

Call: 678-207-8160
Text: 678-207-8160
Email: mike@specialriskterm.com
Instant quote form: Click here

How can I help?

Mike Raines

I am an independent life insurance agent with over 30 years’ experience. I am an expert in finding coverage for those with past or current medical history such as heart disease, diabetes, post cancer, etc. I also specialize in those that participate in scuba diving, mountain climbing, private pilots, etc. I work with the best life insurance companies in the nation, such as Prudential, AIG, Protective Life, Transamerica to name a few. Each carrier has different opinions on rates and underwriting, and it is my job to match you with the best company. To do that, I need to ask you a few questions about your health and lifestyle to qualify you.

For a FREE quote, call, text or email:

Call: 678-207-8160

Text: 678-207-8160

Email: mike@specialriskterm.com

Mailing Address:
3482 Keith Bridge Road Suite #125
Cumming, GA 30041


Mike and Special Risk Term are absolutely top shelf! I was worried that I would not be able to get term life insurance to protect my family, or that the costs would be exceedingly high.

Mike knew the industry inside and out and knew which companies would provide the best options. He coordinated with the underwriters to get the job done and get me an affordable plan, and kept me updated throughout the entire process. Not to mention he did it all electronically in the age of COVID without ever having to meet in person. Highly recommend. Excellent service and expertise!

- Chris M. from Laguna Niguel, CA.

Mike was extremely helpful in locating a life insurance company that would accept a preexisting condition at a reasonable price. He saved time by submitting health records to several companies for a quick preview then following up with the one who offered the most reasonable premium. He knows which companies are most likely to accept certain conditions. Throughout the application process Mike was very quick to respond to e mails and phone calls. We highly recommend Mike if you need life insurance and have a preexisting condition.

- Henry R. from Springfield, TN.

I contacted Mike for advice with life insurance. I had recently left a large firm (where I had life insurance coverage as part of compensation package) to start my own company.  Therefore I needed to self fund my life insurance.  Because of some past health issues I figured I may need to do extra tests to validate my current excellent health status and insurability.  Mike was great to work with, knowledgeable about how underwriters view things, how they will want lots of data from my doctors, and he explained the normal full battery of new tests and data as well as additional or special tests they might want based on my history.  He helped me through the valley to the other side of the life insured promised land for $500K term policy with a duration that meshes well with my retirement date/options and coverage for my family if needed. I highly recommend Mike with Special Risk Term.  He can help you too, so call or email today.

- Richard M. from Ann Arbor, MI

Mike and his team did an extra ordinary job of handling my life insurance situation.  I was unable to secure life insurance because I had cancer 17 years ago however Mike and his team navigated through the challenges to get me a 15 year policy at great monthly rates. Thank you Mike for all your work in in this challenging situation.

- Nathan S. from St. Paul, MN.

Mike and his team made the entire process from start to finish very seamless and also overcame the task with us being multiple states apart with ease. With the easy process and very competitive priced insurance for high risk athletes, you have no need to look anywhere else for coverage. Thanks to Mike and his team for all they did and I highly recommend them for your Special Risk Life Insurance needs.

- Tyler C. from Danville, VT.

Thank you very much, Mike, for all your help in this long process. I know it wasn’t easy, but I appreciate you not giving up on my application and helping provide peace of mind to me and my family.

- Craig S. from Savannah, Ga.

As part of the process of buying a new business, I needed life insurance. However, my congenital heart defect made agents squirm over the phone. Then I found Mike, who not only understood my situation, but found two solutions for me. Within a week, I had confirmation of an AD&D policy and a Term Life policy…all at very reasonable rates. The sense of relief can’t be underestimated. Thank you, Mike!

- Heather G. From Crestview, Fl.

I could not be happier working with Mike Raines to get life insurance coverage for myself after having been declined for health reasons by my employer. My wife and I just had a son and it had become more imperative than ever that my family be protected if I were to pass away. The health screening appointment was conducted at my home around my schedule, which was very convenient. It was clear to me that Mike went above and beyond to make sure the underwriter fully understood my situation, going to bat for me so that I would not be declined again. I am a very happy customer.

- Daniel S. from Seaside, CA.

Best rates and best service I have ever received.

- Robert from Kennesaw, GA.

Mike did an outstanding job getting me my coverage. He went above and beyond answering all my questions. He always returned my calls immediately even on the weekends!!! I highly recommend him.

- Aileen from Woodstock, GA.
About SpecialRiskTerm.com
About SpecialRiskTerm.com

We work with individuals across the nation to secure the best life insurance rates.

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