Whole Life and Permanent Life Insurance

What makes it permanent

Whole life covers you for your entire life rather than a set term, as long as premiums are paid. Part of each premium funds the death benefit and part accumulates as cash value inside the policy, which grows on a tax-deferred basis and can be borrowed against or withdrawn.

Premiums are higher than term for the same death benefit. That is not a hidden catch. You are buying a different product: coverage that will pay out whenever you die rather than only if you die within a window, plus an asset that accumulates alongside it.

Who it genuinely suits

• People with a lifelong obligation, such as a dependent with special needs
• Families with estate planning or wealth transfer goals
• Business owners funding a buy-sell agreement or key person arrangement
• People who have already maximized other tax-advantaged savings and want another vehicle
• Anyone who wants a guaranteed death benefit regardless of how long they live

Who it does not

If your need is to replace income for the next twenty years and your budget is limited, permanent insurance will buy you far less coverage than term for the same money. Being properly covered with term beats being under-covered with whole life. We will tell you that plainly rather than steering you toward the larger commission.

Cash value, honestly

Cash value builds slowly in the early years. Most whole life policies take several years before the cash value approaches the premiums paid, and policies surrendered early frequently lose money. Loans against cash value reduce the death benefit if they are not repaid.

Permanent insurance is a long-horizon decision. It works well when you intend to keep it and poorly when you do not, so the most useful thing we can do at the outset is make sure the premium is one you will still be comfortable paying in fifteen years.

Other permanent options

Universal life offers more flexibility in premium and death benefit, and indexed universal life ties cash value growth to a market index within caps and floors. Both can be appropriate and both are more complicated than whole life. We will only bring them up if they solve something whole life does not.