How to Buy Whole Life Insurance

Nothing says “adulting” quite the same way as shopping for life insurance. While life insurance might seem like something you don’t have to worry about for a long time it’s always good to be prepared now. Even if you don’t have dependents, life insurance can cover any joint debts, such as student loan debt, in addition to funeral costs. Plus, certain life insurance policies, such as whole life insurance, can also double as an investment tool.
Whole life insurance policies typically have a cash value associated with them. A portion of your premium is held in a tax-deferred account which grows at a fixed rate. Think of it as similar to your basic savings account. Sometimes you can borrow money against the balance of your account, or withdraw the funds.
Are you looking into how to buy life insurance? Here’s what you need to know.

Types of life insurance

When you’re reading about life insurance you’re going to come across the same terms used throughout comparisons. Consider this your glossary for understanding the most important life insurance terms.

Whole life insurance

Whole life insurance is a version of permanent life insurance that guarantees the insured will be covered for their entire lifetime, as long as timely payment for premiums is received. As long as you pay on time, the beneficiary named in your policy will receive the total benefit amount if you die.

Universal life insurance

Universal life insurance, often referred to as adjustable life insurance, is similar to whole life insurance in that you’re covered for your entire lifetime and extra funds accrue interest in a cash account. What’s different about universal life insurance is that you can adjust your death benefit and premiums. In simple terms, universal life insurance is a more flexible version of whole life insurance.

Permanent life insurance

Permanent life insurance is a category of life insurance, not necessarily a product. Whole life insurance and universal life insurance are both considered permanent life insurance because you’re covered for your entire lifetime as long as you continue to pay your premiums.

Term life insurance

Term life insurance is the counterpart to permanent life insurance. If you don’t want to be covered for your entire life but say, just for a period of time (perhaps while you’re actively raising children), then you could opt for term life insurance policy. Typical terms are 10, 20, and 30 years.

Is whole life insurance right for you?

While term life insurance is typically a more popular option, here are some scenarios where whole life insurance might be a good fit for your needs:
  • You need coverage that will last your entire life.
  • You want to leave your loved ones funds that can be used to pay costs associated with your estate.
  • You want to leave an inheritance, but don’t have a lot of cash saved.
  • You own a business and want to prevent your heirs from having to pay any business-related debts upon your death.
  • You have a lifelong dependent, such as a special needs child. Whole life insurance can ensure financial stability for your child in the event of your death.
  • You want the security of the cash value that will build up throughout your policy.
  • You’re a high net-worth individual and you’ve maxed out your retirement savings options.
Many people don’t feel they need life insurance for their entire life, just for the period when they are raising a family and have dependents. Yet whole life insurance can be valuable for people in specific financial scenarios whose wants go beyond providing a replacement income should they die.
Here’s why some people choose whole life insurance (and while others opt for term life insurance instead).

Pros & cons of whole life

  • You’re covered for life: No matter what happens to your health in the future, if you keep making your payments you’ll always have life insurance coverage. For this reason, many parents or grandparents open whole life insurance policies for children when they are young. It could also guarantee you will be covered into old age; if you buy term life insurance when you’re 40, your typical 30-year term will be ending when you’re 70 — getting a new policy at that age could mean paying expensive premiums.
  • Cash value: A portion of your premiums is invested and earns a small return. You can borrow from this tax-deferred fund, or potentially withdraw from it.
  • Fixed premiums: You’ll always know exactly how much your life insurance bill will be and your premiums won’t increase as you age or if you experience a disability or health problem.

Whole life insurance vs. term life insurance

Unlike whole life insurance, term life insurance isn’t permanent. Instead, it lasts the length of a set term, which could be 10, 20, or 30 years. If you live to the end of your term, congratulations (you’re still alive!), but you won’t receive a payout. You could also find it more expensive to get a new life insurance policy at the end of your term because, obviously, you’ll be older.
Yet many financial experts recommend term life insurance over whole life insurance because the premiums are much lower. Your quoted rate will depend on your policy amount and age, among other factors, but generally, term life insurance is about 10 times less expensive than whole life insurance.
Here’s how whole life insurance and term life insurance look when you compare them side-by-side.
Whole life insuranceTerm life insurance
Premiums remain the sameYesNot guaranteed
Cash valueYesNo
Guaranteed death benefitYesNo
Choose policy lengthNoYes
Low premiumNoYes
Covered for entire lifeYesNo

Steps to buying whole life insurance

Once you’ve determined how much life insurance you need you can start shopping for the best whole life insurance provider. Here’s how you can get started.

Step 1: Research whole life insurance companies

Not every insurance company offers whole life insurance, so you need to make a list of companies that do so you can start shopping around. Plus, you should do your due diligence to find a life insurance company that offers outstanding customer service — after all, you’re going to be working with them for the rest of your life.
Here are some insurers offering whole life policies to help you get started:


MassMutual has been in business since 1851. The insurance side of the business offers all standard forms of life insurance in addition to added protections such as disability income insurance.
Unique features: They have been named to the World’s Most Ethical Companies list for seven consecutive years. MassMutual also has transparency around their financial position, they have been ranked 84th on the 2019 Fortune 500 list by total revenue and their last dividend payout totaled $1.7 billion.
Best for: MassMutual’s insurance app allows you to manage all of your paperwork on-the-go, making this a good option for those who don’t have access to a computer or who are unable to go into an office. Note, there are currently no MassMutual professionals in Alaska.

Northwestern Mutual

Northwestern Mutual, started in 1859, offers term life, whole life, and universal life insurance, plus disability insurance.
Unique features: Northwestern Mutual ranks at 102 on the Fortune 500. Their commitment to financial transparency means they release an annual report each year on their website. They expect $6 billion to be paid in dividends in 2020. Northwestern Mutual’s long term care rider sets them apart from their competition.
Best for: If you want an insurance rider that helps you plan for long term care, Northwestern Mutual could be the right match.

State Farm

State Farm was founded in 1922 and offers life insurance in every state except Massachusets, New York or Wisconsin, where they are not licensed.
Unique features: State Farm offers a variety of life insurance products including whole life, limited pay whole life, single premium whole life, or final expense, and is renowned for having real-life life insurance agents in every state in which they practice.
Best for: State Farm’s Spanish language website makes them ideal for those who prefer to review their finances in Spanish. Their wide variety of whole life products also make them a good fit for consumers looking for more flexibility in a whole life policy.

Guardian Life

Guardian Life has been in business since 1860 and offers whole and term life insurance, plus disability insurance.
Unique features: They are considered a mutual company, which means they are owned by their policyholders. Guardian also offers a variety of riders for their whole life insurance, such as an accelerated benefit rider, which allows you to access the benefits of a whole life policy sooner in the case of a terminal illness. This rider is included at no extra fee. Other riders include an accidental death benefit and a paid-up additions rider.
Best for: If you’re looking for a private insurance company Guardian Life might be a fit for your values.

Mutual of Omaha

Mutual of Omaha started in 1909 and offers term life, whole life, universal life, and accidental death insurance.
Unique features: You can purchase additional insurance such as long term care insurance, disability income insurance, critical illness insurance and cancer, heart attack, and stroke insurance.
Best for: Mutual of Omaha offers whole life insurance to people aged 45 to 85, or in New York ages 50 to 75. This limits the type of person it’s best for — if you’re looking to purchase whole life insurance in your 20s, 30s, or early 40s, you’ll want to look elsewhere.
When you’re researching a company as a whole, you’ll want to also remember to review their finances. It makes sense that you’ll want the insurer to be around at the end of your life to pay out any claims. That’s why you need to do your best to choose an insurer with stable finances. You can use a rating company such as A.M. Best to compare financial records, plus most reputable insurers provide historical financial reports on their websites.
When you decide on an insurer you want to move forward with, be sure to review their location closest to you through the Better Business Bureau to check that location’s individual rating.

Step 2: Compare possible plans

Here are some terms you’ll want to keep in mind when comparing whole life insurance policies between providers:
  • Participating policy: This is a policy that will pay dividends to you based on the insurer’s performance.
  • Rate of return on cash value: At a minimum, you’ll want a rate that outpaces inflation.
  • Your premium: When it comes to whole life insurance it’s especially important to find a premium that you can comfortably afford.
  • Compare riders: Riders are extra features you can add to your policy that could cover you in unique situations. For example, some riders allow you to defer or skip payments in the event that you are ill or become disabled.
  • Approval process: When you’re applying for life insurance, there are three typical ways the insurer approves you: fully underwritten, simplified-issue, or guaranteed-issue. If you’ve had difficulty getting approved for life insurance in the past due to health problems, simplified-issue or guaranteed-issue might be easier for you to obtain but keep in mind these types of policies might not pay the full death benefit.
There are companies that can help you skip the time it takes to review all the various companies., for example is a life insurance aggregate that can help you compare multiple companies and plans. It has policies as low as $11 per month for $100,000 coverage and $38 per month for $1 million coverage.

Step 3: Gather your documents

When you’re applying for life insurance you’ll typically need to provide detailed information about your current health status and any medical issues in the past, plus you’ll need to provide information about any family medical issues.
You’ll likely need to undergo a life insurance medical exam or assessment and your insurer may collect additional information about your lifestyle, as well as your medical history from your doctors.
Also, be prepared to provide documents that can verify your identity, such as your Social Security number. Your insurer will likely also do a soft credit pull before they quote your rates.

Step 4: Ask for quotes

Here comes the fun part. If you want a good deal on whole life insurance you’re going to have to shop around and find the best life insurance quote for your life insurance needs. You can compare quotes online or create your own spreadsheet to stay organized.
However, there are online platforms that can help make this easier. Reviewing the best life insurance companies side by side with free quotes so you can see the various companies and estimated premiums based on the information you enter: amount of coverage desired, type of policy you want, a list of any medical conditions, annual income you'd want to be replaced should anything happen to you, and whether bundling options are available for combining auto insurance and homeowners insurance to lower premium payments.


One such comparison tool is Policygenius, which touts that you'll save up to 40% when you compare quotes from the top insurers in one place. If you find a lower rate, they'll even give you $100 because they are sure they can give you the lowest quotes. And it's free.
Read a full review on Policygenius.

Step 5: Choose your insurer and begin paying premiums

Once you have found the company you believe best fits your needs, you'll need to begin the application process and provide more detailed health records that could alter the quoted price, but not by too much.
Once you’ve decided on the right insurer for you remember that you’ll have to carve money out of your budget to afford your premiums. This could require you to overhaul your household budget or find ways to increase your income.
You can elect to pay your premiums with a lump sum for the year or to pay monthly.

Bottom Line

Getting a life insurance policy is a major commitment, especially if you opt for whole term life insurance. Though it can be tempting to put the process off, tackling this step now can help you lock in lower premiums and give you peace of mind.
Remember, your premiums increase as you age or experience health issues. When it comes to life insurance it’s better not to procrastinate.

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