The short answer
This guide answers the most common questions about whole life insurance through an independent agent.
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.
MarketView Agency is an independent insurance agency (National Producer Number 18345705).
On this page
- Whole life insurance through an independent agent: what sets your whole life premium
- Where to buy whole life insurance: should you buy whole life for a child?
- What happens after you apply: underwriting
- Average cost of whole life insurance: what is whole life insurance?
- A worked example
- Is whole life right for you?
- Frequently asked questions
Whole life insurance through an independent agent: what sets your whole life premium
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.
Where to buy whole life insurance: 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.
What happens after you apply: underwriting
Underwriting is how an insurance company decides whether to offer a policy and at what price. It sounds technical, but the idea is simple. The insurer wants a clear picture of your health, your habits and how much coverage you are asking for.
The application
You answer questions about your age, height and weight, tobacco use, medical history and prescriptions. Answer every question fully and honestly. A wrong answer can give the insurer grounds to contest a claim later, especially in the first two years of the policy.
Database checks
Most insurers check prescription history and a shared industry database of past applications. Many also look at your driving record. These checks are why some policies can skip a medical exam: the records answer many of the same questions.
Exam or no exam
Some policies ask for a short exam at home or work, usually a quick health check and a blood and urine sample. Others decide from your answers and records alone. A policy without an exam is faster, but it can cost more or cap how much coverage you can get.
Once the insurer finishes, it offers a rate class. Healthier applicants get better classes and lower rates. If the offer is higher than the quote, an independent agent can often take the same application to another carrier that views your history more kindly.
Average cost of whole life insurance: what is whole life insurance?
Whole life insurance is permanent coverage. As long as you pay the premiums, it stays in force for your entire life, and your beneficiaries receive the death benefit whenever you pass away.
It also builds cash value, a savings-like amount inside the policy that grows over time on a schedule set in the contract. You can borrow against it or, if you surrender the policy, receive it minus any charges.
Premiums on traditional whole life stay level for life. They are higher than term premiums for the same amount, because the coverage never ends and the policy builds value.
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 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.
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.
