How Long Is Whole Life Insurance?

Q: How Long Is Whole Life Insurance?

Whole life insurance policies typically last until the policyholder's death, as long as the premiums are paid on time. Some whole life insurance policies may have a set term, such as 20 or 30 years, after which the policyholder can choose to renew or convert the policy. Whole life insurance policies may also have a maturity date, which is the point at which the policy's cash value equals the death benefit. This can range from age 100 to 121, depending on the policy. In some cases, whole life insurance policies may be surrendered or cashed out before the policyholder's death, which would end the coverage. However, this may result in tax consequences and a loss of the policy's cash value.

Whole life insurance offers coverage for the rest of your life and includes a cash value component that lets you tap into it while you’re alive. Whole life insurance is more expensive than term life insurance because people with a whole life policy are guaranteed to have a death benefit when they die.

Policy Type	Coverage Amount	Term Length
Whole Life Insurance	$8 million	Instant (5 minutes or less)
Term Life Insurance	$500,000	10, 15, 20, 25 or 30 years

Whole life insurance offers three kinds of guarantees:

Guaranteed death benefit
Guaranteed cash value growth
Guaranteed level premiums

Policyholders of whole life insurance are usually eligible for annual dividends from the life insurance company. If you’re buying whole life insurance, confirm that the policy is “participating” so that you can reap the benefits of dividends.

When you buy a policy, you’ll choose a life insurance beneficiary to receive the death benefit. You don’t have to split the payout equally among beneficiaries. You can designate the percentage for each, such as 75% to Mary and 25% to John. It’s also a good idea to designate one or more contingent beneficiaries.

Most whole life policies have a guaranteed return rate at a low percentage, but it’s impossible to know how much your cash value will actually grow. You can tap into cash value with a withdrawal or a loan, or also by surrendering the policy. If you take a loan, it’s tax-free, and you can pay it back, with interest.

Whole life insurance isn’t that simple. If you stop paying, the insurance company will use the cash value to pay any premiums until the cash value runs out and the policy lapses. But there are alternatives to simply stopping payments.

Whole life insurance is simply unaffordable for many people. Many life insurance shoppers look at term life vs. whole insurance costs. It’s never an apples-to-apples comparison because the policies are so different. That said, here are examples of whole life insurance quotes based on a 30-year-old male of average height and weight for $500,000 in coverage.

Given the expense of whole life insurance and that many people do not need insurance for their entire lives, whole life insurance is often not worth it. However, there are some specific situations where buying another form of permanent life insurance makes sense.