Policy Types

How Does a Whole Life Insurance Policy Work?

Arm yourself with facts when looking for life insurance. Read this article to learn basic facts about whole life Insurance, a permanent cash value policy that pays death benefits and earns you money.

Three Basic Elements That Define a Whole Life Insurance Policy

Many of the questions you might have regarding whole life insurance can certainly be answered by a knowledgeable life insurance agent or broker. However, before you go shopping, it might be a good idea to educate yourself on the basics. Not only does this provide you with valuable information, but it can help prompt additional questions that you might have as you're deciding on what type of policy to buy. The following are three basic elements that define a whole life policy:

1. Whole life insurance is permanent insurance

Whole life insurance is a permanent* cash value policy that provides coverage for your whole life, rather than for a specified term. A whole life policy can never be canceled as long as required premiums are paid. It provides protection that can last your entire lifetime and your beneficiaries receive death benefit proceeds tax-deferred.

2. Whole life insurance earns cash value

Each time you pay your premium, a portion is used to provide you with life insurance coverage. The remainder, however, is set aside and allowed to accumulate. This component, called cash value or loan value, builds over time and can be taken out as a loan against the policy. Keep in mind that loans against the policy will accrue interest and decrease both death benefit and cash value by the amount of the outstanding loan and interest.

3. Whole life insurance offers

  • Level premiums

    The premiums you pay remain the same for the life of your policy, regardless of your age or health.

  • Death benefits

    Your beneficiaries receive the face amount of the policy upon your death. However, the death benefit will be reduced by any outstanding cash value loans

  • Cash value

    Your cash value will grow each year, tax-deferred. You also have the option of borrowing against your policy's cash value.

A whole life policy might be right for your family if:

  • You're looking for life insurance that you can't outlive.
  • You need life insurance to be part of your long-term financial planning.
  • You want the opportunity to build cash value.

Deciding on the type of life insurance doesn't have to be overly complex. Now that you are armed with basic information, you'll be in a position to discuss with your agent and determine the best policy for you. For more information on permanent life insurance policies, including whole life, be sure to visit Protective's Life Insurance Learning Center.

* As long as required premium payments are timely paid.

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What is Whole Life Insurance

Not many people can answer the question, “What is whole life insurance?” This article defines aspects of whole life insurance and is designed to provide you with information to help you determine what type of insurance best meets your needs. For more information, visit our learning center.


All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

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