If you’re considering a life insurance policy, you might feel like you're about to step into a confusing web of policies and terms. The ability to search for policy types and providers online means you have choices when it comes to finding the best whole life insurance. How do you sort through the web to find the best option for you?
When it comes to life insurance, your first decision will be between term or whole-life policies. From there, you’ll need to choose the provider that can offer you the best rate. We always recommend getting free quotes to find your best life insurance rates.
Benzinga has put together this guide to give you more insight into whole-life insurance policies and to help you narrow your search.
Are you convinced a whole life insurance policy is right for you? Here are Benzinga’s top picks for the best life insurance companies that provide permanent life insurance policies.
1. Best for Additional Coverage: Prudential
Prudential offers permanent life insurance policies, but not a basic whole life option. Its indexed universal life, universal life and variable universal life policies are all a means for you to build cash value through your policy. Prudential also allows you to customize your policy by adding riders to extend your coverage. These optional riders include serious illness, disability or additional death benefit riders.
Prudential also provides survivorship or second-to-die insurance. This policy pays out the death benefit after 2 people have passed, typically a married couple. This type of policy is most often used in estate planning when parents wish to leave an inheritance to their children.
2. Best for Customer Service: Northwestern Mutual
Northwestern Mutual takes the time to match you with the right financial advisor. Answer a few basic questions online about yourself and your financial goals and an advisor will contact you to help you find the right type of insurance for your goals and budget.
When you choose a whole life policy from Northwestern Mutual, you’re guaranteed your premiums will never increase. To top it off, Northwestern Mutual boasts some of the highest financial strength ratings out there, so you can be assured your policy is in good hands.
3. Best for Alternative Policies: AIG
AIG offers a variety of life insurance products to meet your needs. It provides Guaranteed Issue Whole Life if you’re 50 to 85. No medical exam is required, and the tax-free benefits can help with your final expenses.
The company’s unique Quality of Life offering is a product suite that can provide protection not only upon unexpected death, but also in the case of unforeseen illness or insufficient retirement income. All products in this suite have built-in, no-cost benefits that can be used while you’re still living. AIG makes service simple with the ability to manage your policy online.
4. Best for Insuring Children: Gerber
You can purchase a Gerber Life Grow-Up plan for a child if you’re a parent, grandparent or legal guardian. Apply for this whole life insurance policy when your child is between 14 days and 14 years old.
You can lock in an affordable premium to accumulate cash value throughout your child’s life. The child can then cash out the policy as an adult or carry this plan throughout his or her lifetime.
5. Best for Investment Options: MassMutual
MassMutual is a long-running insurance provider with competitive rates. You’ll be able to choose your investments if you purchase a variable life insurance policy from MassMutual. Some participating policies also provide the opportunity to earn dividends and build account value.
Dividends are never guaranteed, but MassMutual has paid dividends to eligible participating policyholders since 1869. These dividends can help increase the cash value or your policy or bump up your death benefit. You can also choose to use dividends to help pay your premiums.
Whole Life Insurance Quotes
Cost is always a deciding factor, and note that whole life is not cheap life insurance. While it will certainly have a higher price tag than term life, the final cost of your whole life insurance policy will depend on a number of personal factors.
Take a look at this chart for a snapshot of how your age and coverage amount interact to create your monthly premium.
What is Whole Life Insurance?
Life insurance — term or whole — is designed to help your loved ones recover financially when you pass away. It can ensure that your spouse upholds the same standard of living or that you can provide financially for young children.
Whole life insurance is a type of permanent life insurance. A whole life insurance policy will stay in effect for your entire life as long as you continue to pay for it.
On the other hand, term life insurance policies only covers the person insured for a set number of years. That set number of years is your term, and common terms are 10, 20 or 30 years. When the term is over, your policy expires and death benefits are no longer available.
How Whole Life Insurance Works
Understanding what your policy will provide is important and insurance policies are full of jargon. Here are some common terms to become familiar with before you start comparing whole life insurance policies.
- Beneficiary: The person, people or entity you choose to receive your benefit upon your death. The beneficiary will receive a lump-sum payment after a death claim is filed.
- Death benefit: The death benefit is the lump-sum payment your beneficiary receives when you die. Your beneficiary will receive a $500,000 death benefit if you select a $500,000 coverage amount.
- Policyholder: The policyholder is the person who owns the whole life insurance policy. In most cases, the policyholder is the person whose life is insured. You’re the policyholder if you’re buying a whole life insurance policy on yourself. You may also be able to purchase a whole life insurance policy to insure someone else’s life.
- Premium: A premium is the monthly payment you submit to keep your life insurance policy active. A whole life policy requires you to pay your premiums for the rest of your life. In some cases, you may be able to make annual payments instead of monthly payments.
When you purchase a whole life insurance policy, you enter a contract with the insurance provider. Your whole life insurance policy will go into effect as soon as you make your first premium payment. Coverage will remain active as long as you continue to pay your premium. As soon as your policy is active, your beneficiary is eligible to receive the death benefit upon your death. However, there are some circumstances in which your beneficiary may not be able to receive the death benefit.
When you pass away, your beneficiary will need to contact your insurance agent to notify the agent of your death. This process is called a death claim. You’ll also need to submit a certified copy of your death certificate, which is usually available from the funeral director.
Your insurance company can then begin processing the claim, and your beneficiary will receive the death benefit if the claim is approved. In some cases, your beneficiary may be able to choose how they receive your life insurance payouts.
Your whole life insurance policy will also come with a cash value. The cash value of your policy is a tax-deferred savings component of your policy. When you pay your premium, a certain percentage of the money goes into this account. As with most savings accounts, the cash value of your policy will earn interest over time, based on a rate determined by your policy. You’ll be able to withdraw money tax-free from the cash value of your policy and use it to take out a low-interest loan. If you surrender your policy, you can also collect the cash value.
When Whole Life Insurance is Worth It
Whole life insurance rates are often higher than other types of life insurance. It can be a good idea if you:
- Make a lot of money and want to use it as an investment strategy. If you need life insurance anyway, it can be worth the higher premiums to build your cash value over time. This is especially true if you’re younger.
- Want to use it to build your retirement savings. Another reason to take out a whole life insurance policy is to use the cash value to fund your retirement later in life.
When Whole Life Insurance is Not Worth It
A whole life policy isn’t best for everyone. Whole life might not be a good idea if you:
- Have a modest income. A term life insurance policy is probably a better option for you. It requires lower premiums and is a good option for most life insurance policyholders.
- If you’re older. As you age, you’re going to see increased premiums for your life insurance policy. The cash value of your policy probably won’t be able to offset these increased premiums. Take a look into life insurance for seniors.
Is Whole Life Insurance Right for You?
The benefits you want and the rate you can afford are at the heart of your decision for a life insurance policy. If you’re looking for an insurance policy you can also use as an investment product, whole life insurance may be a good option. Find your best policy by comparing quotes from a variety of providers. Enter your ZIP code and get started today.
Is whole-life insurance or term-life insurance better?
Both whole life insurance and term life insurance are good, and the best policy depends on your needs. Term life is only good for a term, while whole life insurance is good as long as you pay the premiums.
Does whole-life insurance ever expire?
Whole-life insurance only expires when the insured passes or stops paying the premiums.
Is term-life insurance or whole-life insurance cheaper?
Term-life insurance is cheaper than whole-life insurance.
Benzinga crafted a specific methodology to rank life insurance. To see a comprehensive breakdown of our methodology, please visit our Life Insurance Methodology page.