What is Whole Life Insurance?

Whole life insurance covers you for as long as you live if your premiums are paid. You generally pay the same amount in premiums for as long as you live. When you first take out the policy, premiums can be several times higher than you would pay initially for the same amount of term insurance. But, they are smaller than the premiums you would eventually pay if you were to keep renewing a term policy until your later years. Whole life insurance normally builds cash value.

Whole life policies are also referred to as permanent life insurance. There is also a whole life policy that allows you to pay the entire premium due for a shorter period, such as 20 years or until age 65. Premiums for these policies are higher since the premium payments are only made for a specific number of years.