How To Purchase Whole Life

What is the Best Way to Buy Whole Life Insurance?

Life insurance can be a difficult subject to discuss. The topic is complex, the choices are numerous, and we often feel uneasy about preparing for the end of life. Besides that, although most people understand the importance of life insurance, many are unsure of which form is best for them. Whole life insurance is an ideal choice for some individuals, but there are several options to choose from. 

What is Whole Life Insurance?

Whole life insurance is a type of permanent life insurance that can provide coverage for the rest of one’s life. It offers a variety of guarantees, which may appeal to someone who does not want to be left in the dark after purchasing life insurance. When you first apply for coverage, you are committing to an arrangement under which the insurance provider guarantees to pay a specified amount of money to your beneficiary – known as a death payout – if you die. 

You will choose the amount of coverage you need, and your premium will be determined based on your age, gender, and health. Your whole life insurance policy will remain in place as long as you pay your premiums. Also, your premiums will remain the same regardless of changes in your health or age.

For instance, assume you buy a whole life insurance policy at the age of 40. When you buy the policy, the premiums are fixed for the duration of the policy as long as you pay them. They would be higher than term life insurance rates because your whole life is factored into the calculation. Whole life plans, unlike term insurance, do not expire. The policy will remain in effect until you die, or it is cancelled.

What Is the Cash Value Benefit and How Does It Work? 

The premiums you pay into the policy collect cash value over time, which can be used under certain circumstances. The cash value may be withdrawn as a loan or used to pay your insurance premiums. All debts must be repaid before you die, or they will be excluded from the death benefit of the policy.

Whole life insurance policies are one of the few types of life insurance that generate cash value. When premiums are paid, cash value is created; the more premiums paid, the more cash value there is. The main advantage of cash value is that it can be withdrawn as a policy loan.

Types of Whole Life Insurance 

There are many forms of whole life insurance to choose from while purchasing it. The following is a rundown of the different forms of whole life insurance, as well as their characteristics and benefits.


Accumulates cash value and stays in place until you die as long as you pay the premiums, which remain the same during the policy’s term. A standard whole life insurance policy has level premiums, which ensures the premium will remain constant during the policy’s term. It is valid until you die as long as you pay the premiums and accumulates cash value, which grows with the length of time you own the policy.

Limited Payment

The premiums are “frontloaded,” which means you only pay premiums for a set number of years. You can make premium payments for a set number of years – 10, 15, or 20 – and pay for the policy up front with this form of policy. This removes the need for you to pay premiums for the rest of your life. Instead, you pay the premiums up front and then enjoy a premium-free policy for the rest of your life.

Single Premium

Instead of relying on the insurer to spend the money for returns, the policyholder finances the policy. To buy a single-premium policy, you must pay a lump sum in return for a death payout. You may, for example, pay $25,000 for a $50,000 death benefit. The more you pay, the greater the death benefit.

Modified Premium

Allows you to pay lower premiums for the first 5 to 10 years, then gradually increase them. Life insurance plans with modified premiums allow you to pay lower premiums for the first 5 to 10 years. Following that, premiums will increase. This form of policy is perfect for someone who wishes to purchase a policy with a high death benefit but assumes they will be able to pay higher premiums in the future.


A mutual life insurance policy for married couples that covers both partners and does not pay out the death benefit until both have died. Some married couples opt for a survivorship policy, which is a type of joint life insurance policy. This form of policy covers all partners and does not pay out the death benefit until both have died. If parents are concerned that their special needs child will not be cared for after they pass away, a survivorship policy will ensure that the child has the necessary funds. 

Universal Life

Flexible premium premiums are dependent on the cost of insurance and the policyholder’s age/health, and any amount above the cost of insurance is used to accumulate cash value on the policy. A universal life insurance policy is a form of whole life insurance policy with adjustable premium payments. The premiums are dependent on the cost of insurance, which includes administration expenses, death charges, and other costs associated with keeping the policy in force. The cost of insurance is determined by the policyholder’s age and fitness. The cost of your insurance will rise as you get older. Any fee you pay in excess of the cost of insurance is added to the policy’s cash value.

Variable Universal Life

Invests the cash value part of the premium in the stock market. A variable universal life insurance policy acts similarly to a universal life policy, with one exception. Instead of a fixed cash value, this plan invests the cash value portion of the premium in the economy. This means that the cash value will rise when the investments perform well – or fall when they do not.

Participating: When an insurance company has a surplus of revenue, it distributes it to policyholders in the form of “dividends.”

Non-Participating: Dividends are not paid if there is an earnings surplus.

Participating or non-participating whole life insurance plans are valid. If the insurer is participating, it ensures that when the insurance provider has a surplus of revenue, it distributes it to policyholders in the form of “dividends.” These dividends are not taxed by the IRS since they are considered an overpayment on the insurance policy. A whole life program is called non-participating if it does not pay dividends.

Final Expense Insurance

Since the face value is lower, it is more affordable and easier to apply for than conventional life insurance. It is primarily intended to help offset end-of-life expenses such as medical bills and funeral costs. 

Final expense insurance is one of the most common forms of whole life insurance. Last expense policies, also known as burial insurance or funeral insurance, are primarily intended to help cover end-of-life expenses such as medical bills and burial costs. Since final expense plans are designed to cover immediate costs for living loved ones, they normally have smaller face sums; generally under $20,000. Since the face sum is so minimal, final expense policies can be more flexible and simpler to apply for than standard life insurance. 

Funeral Advantage is a final expense protection plan that is specifically intended to assist with the payment of final expenses such as medical bills and funeral expenses. Funeral prices, like everything else nowadays, are increasingly increasing. Depending on the services used, the average funeral will cost up to $9,000 USD. Caskets on their own will cost thousands of dollars, depending on the material used.

Many families are unable to afford the high cost of their loved one’s final arrangements. That is why there is Funeral Advantage. It offers a cash payout from life insurance when the family is in need. Most of our plans are between $10,000 and $15,000 in value, making them ideal for low-income families worried about paying for their loved one’s final arrangements. Unlike other insurance plans, Funeral Advantage does not require a medical test in order to apply. You just need to fill out a one-page questionnaire and answer a few health questions.

Things to Consider When Selecting a Whole Life Insurance Policy

Riders. Riders are optional protections that you can add to your policy to ensure that you are also covered in the event of injury, terminal illness, or other unforeseen circumstances. What riders are available to add to your policy can be determined by your financial professional. 

Premium Waiver. When selected, it maintains your coverage by waiving premiums if you, as the insured, are unable to work due to injury or illness and are deemed totally disabled.

How to Buy a Whole Life Insurance Policy

When looking for long-term financial security, it’s critical to work with providers and financial professionals you can trust. Look for a life insurance company that shares your values and has the longevity to demonstrate that they will be there for you when you need them. When looking for a whole life insurance company, consider how dividends from a mutual insurance company can help you feel more confident about your finances.

There really is no specific whole life insurance policy that is best for everybody. You should compare quotes to find the most competitive rates and the right policy for your family’s needs, but you should also look for a provider who:  

  • Is accommodating to applicants with any health problems you might have 
  • Offers a fair rate of return on cash value 
  • Provides the policy choices and riders you want 
  • Has good customer service and online policy management options 
  • Highly regarded by reputable third-party organizations

Determine how much life insurance you need. 

How much coverage you require is largely determined by where you are in life and how many people rely on your income. In general, the more coverage you’ll need to compensate for the years of potential wage-earning ahead of you, the younger you are. And the more people who rely on you, the more coverage you’ll need to meet all of their needs after you’re gone.

Your life insurance plan should be tailored to your family’s financial needs, including your wages, debts, expenses, and dependents’ needs. Experts recommend that you provide life insurance coverage equal to 10-15 times your annual salary to cover these expenses for your family.

Current Liabilities

Do you owe money on your student loans or have a mortgage? Your death insurance should be sufficient to cover your debts, and your policy should last as long as your oldest debt. If your family is unable to pay their bills, they risk losing their house and/or other properties to collection agencies.

Married vs. Single

When shopping for life insurance for your partner, you must remember not just the financial assistance you provide your spouse today, but also the changes they would need to make if you died. Would they have to work fewer hours to provide childcare? Or would they have to pay for extra childcare if you weren’t there? Include those costs in the coverage provisions as well.


Having a child can be costly. You must remember not only what you already pay for childcare, but also future costs such as your children’s college tuition. Leave enough to cover your children’s tuition, housing, and food, or to finance a 529 plan for their education.

Determine the type of policy you need. 

After deciding the amount of coverage you need, you will determine which life insurance policy to purchase. 

Gather the documents you’ll need to get started. 

You will make the application process as easy as possible by getting all of the necessary paperwork on hand before applying for life insurance. There are some examples: 

  • Identification, citizenship, and age verification are all required
  • Income verification
  • Proof of residency

Look for a life insurance policy that fits your needs. 

Because each life insurance company evaluates each application on an individual basis, shopping around with multiple insurers rather than working with just one will result in lower premiums. Working with an unbiased, independent agent helps you find the best provider for your budget, coverage needs, and health profile at the best price.

Finish the application and phone interview. 

The initial life insurance quote gives you an idea of the premiums you’ll pay, but the actual application is a little more detailed. A phone interview will be required as part of your application, during which you will be asked about your medical history, lifestyle, and other personal details. Life insurance companies conduct a thorough examination of your medical history and background, so if they discover something you failed to report, your actual premiums may differ from the initial quote you received.

When Does a Whole Life Insurance Policy Make Sense? 

Given the cost of whole life insurance and the fact that many people do not require insurance for the rest of their lives, it is not always the best product to buy. However, there are some circumstances in which permanent life insurance makes sense.

Funding a trust: Permanent life insurance can be used to fund a trust that will support children after you die. 

Paying estate taxes: If your estate exceeds the current estate tax exemption, which is $11,580,000 in 2020, permanent life insurance may make sense to help your heirs pay any estate taxes owed when you die. Because some states have lower estate tax exemptions, it may make sense for people who live in those states as well.

Funding a buy-sell agreement: If you own a business with a partner, you might consider purchasing each other’s shares in the business at death with whole life insurance.

It is best to conduct research and consult with an experienced financial representative before selecting a whole life insurance company. To assess your specific situation, it is recommended to consult with an experienced financial professional.

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