The short answer
This guide answers the most common questions about whole life insurance quotes for estate planning.
Cash value is what makes whole life different from term. It grows slowly at first, then builds over decades.
Here is a clear explanation of how it works and how people use it.
Part of our complete guide: Whole Life Insurance: The Complete Guide.
Quick answer
Cash value grows on a schedule set in the contract. Policy loans are flexible, but unpaid loans reduce the death benefit. Participating policies may add dividends, which are not assured.
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On this page
- Whole life insurance quotes for estate planning: what affects the cost of whole life insurance?
- Whole life insurance with long term care: should you buy whole life for a child?
- Whole life insurance with dividends: how whole life insurance works
- Whole life insurance with no medical exam: how underwriting works for whole life insurance
- What sets the price for this search
- A worked example
- How life insurance is taxed
- Is whole life right for you?
- Frequently asked questions
Whole life insurance quotes for estate planning: what affects the cost of whole life insurance?
Whole life costs more than term because it lasts for life and builds cash value. Your age and health set the base. The amount and how long you choose to pay premiums do the rest.
Some people pick a limited-pay design, paying premiums for 10 or 20 years, then keeping lifelong coverage without further payments. That raises each payment but ends them sooner.
Whole life insurance with long term care: should you buy whole life for a child?
Children's whole life policies are affordable because of the child's age. Many include an option to buy more coverage later without health questions.
Make sure the parents are well covered before buying a policy on a child. Then a child policy can be a thoughtful long-term gift.
Compare rates from several carriers in about two minutes. Free, no obligation.
Whole life insurance with dividends: how whole life insurance works
Whole life combines lifelong coverage with cash value. It is the most predictable kind of permanent life insurance.
- Lasts for life as long as premiums are paid.
- Level premiums that do not rise with age.
- Cash value that grows on a schedule in the contract.
- Possible dividends on participating policies from mutual insurers, though dividends are never assured.
Whole life insurance with no medical exam: how underwriting works for whole life insurance
Every life insurance application goes through underwriting. That is the insurer's review of who you are, how healthy you are and how much risk the policy carries. The result is your rate class, which sets your price.
- Your answers. Health history, medications, tobacco or nicotine use, family history, travel and hobbies.
- Records. Prescription history, a shared database of prior insurance applications, and often your driving record.
- Sometimes an exam. A short visit from a paramedical examiner to check height, weight, blood pressure and lab samples.
- Sometimes medical records. For larger amounts or certain conditions, the insurer may ask your doctor's office for notes.
Insurers do not all weigh these things the same way. One carrier may treat a managed condition, like controlled blood pressure, more favorably than another. That is a big reason to compare several carriers rather than accept the first offer.
Be complete and honest on the application. Policies have a contestability period, usually the first two years, when the insurer can review a claim against what you said when you applied.
What sets the price for this search
- Age: the younger you are when you apply, the lower the rate.
- Health class: from your application, records and any exam.
- Tobacco: usually the single biggest factor after age.
- Coverage amount and term length: more money and longer terms cost more.
- Riders: extras like return of premium or disability waivers add to the price.
How to get covered in 3 steps
- Check your rate. Pick your state and answer a few quick questions about the coverage you want.
- Compare carriers. A licensed agent compares whole life insurance options from several insurers and explains the trade-offs.
- Apply and get covered. Many applications take one phone call. Coverage starts once the policy is issued and the first premium is paid.
A worked example
Say you're 34 with a $150,000 mortgage balance and 16 years left, $19,000 in other debts, and an income of $55,000. Here's one simple way to size coverage:
| Item | Amount |
|---|---|
| Mortgage balance | $150,000 |
| Other debts | $19,000 |
| 4 years of income | $220,000 |
| Total to consider | $389,000 |
In this example, a 20-year term would outlast the loan (it ends around age 54). Your own numbers will differ; use this as a starting point and adjust for savings, other coverage and future costs like school.
How life insurance is taxed
Life insurance death benefits are generally income-tax-free to the beneficiary. That is one reason life insurance works well for a goal like paying off a mortgage: the amount your family receives is generally the amount they can use.
There are exceptions. Interest paid on a benefit that is held and paid out over time can be taxable. Very large estates can owe estate tax, and a policy you own counts toward your estate. Policies that were sold or transferred for value can also lose some of the tax benefit.
Tax rules change and every situation is different. For anything beyond the basics, talk with a tax professional. We can explain how a policy works, but we do not give tax or legal advice.
Is whole life right for you?
Often a good fit
- you want coverage that never expires, for final costs, a legacy or estate planning.
- you value predictable, level premiums and steady cash value.
Maybe not the right fit
- you need the most coverage for the least money; term usually fits better.
- the premium would strain your budget for years.
