Whole Life Insurance Comparison

Whole Life Insurance comparisons should focus on more than just rates and quotes. It is important to select the right type of coverage, find a plan with the right features, and pick between a variety of policy options to best meet your needs.

A growing family should compare four whole life components:

• Comparison to temporary coverage: term life 
• Features: cash accumulation, policy loans, paid up dates, and guaranteed purchase
• Riders: waiver of premium, spouse and dependent children term rider
• Quotes: compare premium rates

It is also important to compare whole life insurance features which many companies will build into the base policy: cash value accumulation, policy loans, paid-up time frames, and guaranteed purchase options are some of the more common features.

Whole life provides guaranteed cash value which earns tax deferred interest as the cash accumulates inside your policy.  Policies may have varying cash accumulation schedules, and differing levels of tax deferred interest that you will want to compare. 

This cash value can help you meet emergency needs by allowing you to access the funds through a policy loan.  The loan is not dependent upon any credit checks, and you repay the loan via a future increase in premium payments.  Whole life policies will have varying interest and repayment rules.  Be sure to compare policy loan requirements. 

Whole life can be “paid up” at age 65 or 95, depending upon your preference.   No additional premiums will be due once you reach the paid up age.

Guaranteed purchase option allows you to purchase additional coverage with no evidence of insurability.  Make sure you compare the age limit on this feature. 

You should also compare whole life insurance to other types of permanent cash value policies such as universal life, and to temporary policies such as term life.

Permanent coverage is designed for the "WHEN" in life: when the kids finish paying for college, when I retire, and when I die.  Cash value policies such as whole life are designed to be in place when these events occur.

Whole life provides guarantees.  A guaranteed death benefit will not change as long as premiums are paid when due.  Guaranteed premiums promises level premiums over time.  And guaranteed cash values earn tax deferred interest at pre-determined rates.   

Universal life is a alternative form of permanent coverage that offers flexibility: the ability to vary premiums, cash values, and death benefits to meeting changing needs.

Term life insurance addresses the "IF" in life. Term life makes the most sense when the need for coverage will disappear at some point, such as once college expenses have been put to rest. It addresses the question of: "what if I die before paying for the kids’ education?", or "what if I die with no assets for my spouse to draw upon?"

Compare whole life insurance riders as your second to last step.  Some common whole life rider options include spouse and dependent term life coverage, and waiver of premium benefit. 

Many whole life policies provide an option to attach spouse and dependent term life coverage into a single policy.  Compare the rates of adding these other family members as riders as opposed to applying for individual plans.  Sometimes the rates, convenience, and simplicity of a single policy make the most sense.

A waiver of premium rider waives all premiums in the event that you become totally disabled.  Many people get sick, lose their income, and drop their whole life coverage to cut costs.  Once returning to work, they may no longer qualify for coverage.  This rider addresses this concern.