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Whole Life Insurance: Buyer’s Guide

Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella...

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Reviewed byDaniel Walker
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UPDATED: Jun 29, 2020

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The Lowdown...
  • This insurance lasts for your entire life
  • A portion of your premiums will be paid into a cash value savings account that can be used in retirement
  • Some permanent policies will invest your premiums into the stock market or other public investments for a larger, yet riskier, investment

The question most often asked by someone in the market for life insurance is whether to buy term life insurance or whole life insurance. The benefit of a whole life policy is that is acts as an investment. The drawbacks are that it will cost more, and may not reap the benefits of other investments in the marketplace.

The answer to which is best lies with the needs of the person — such as their age, health, and financial goals at the time. The only way to find out what is the best option for you is to research the features of a whole life insurance policy.

Ready to find your whole life insurance policy? Use our FREE quote tool to find your rates today.

Top Whole Life Insurance Companies by Market Share

Many people are attracted to the cash value bonus that whole life has to offer in addition to the death benefit. To get the most from this type of policy you have to start early. It takes time for the policyholder to see earnings after the purchase of the policy because of the initial fees and commissions involved.

When it comes time to purchase your whole life policy, a good place to start is to look at the companies that are leading the country. The best indicator of a leading company is by comparing their market share to their competition.

See the leading life insurance companies by market share below.

Top 10 Life Insurance Companies by Market Share
RankCompaniesDirect Written PremiumMarket Share
1Northwestern Mutual$10,517,115,4526.42%
2Metropolitan Group$9,821,445,9536.00%
3New York Life$9,295,848,3005.68%
4Prudential$9,128,805,0605.57%
5Lincoln National$8,769,303,1745.36%
6MassMutual$6,854,713,0574.19%
7Aegon/Transamerica$4,809,856,6502.94%
8John Hancock$4,640,905,0172.83%
9State Farm$4,633,004,9632.83%
10Minnesota Mutual$4,422,100,0282.70%
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The larger the market share, the more of the whole customer base the insurer has control over. This shows consistent growth and customers that keep business with the insurer over time.

Sample Monthly Whole Life Insurance Rates

Each insurer underwrites a little differently and so the prices for premiums vary. While most insurers look at different risks in your life, most underwriting procedures will look at your demographics as well as your tobacco use. See below an example of whole life insurance rates for non-smokers offered by Foresters Financial and State Farm.

Average Monthly Whole Life Insurance Rates for Non-Smokers
Non-Smoker
Age & Gender
Foresters Financial
– $250,000 Policy
State Farm
– $250,000 Policy
Foresters Financial
– $500,000 Policy
State Farm
– $500,000 Policy
25-Year-Old Female$156.80$203.14$304.24$400.19
25-Year-Old Male$178.68$225.12$347.99$444.14
30-Year-Old Female$188.96$234.24$368.11$462.39
30-Year-Old Male$216.52$260.14$422.80$514.19
35-Year-Old Female$230.52$273.19$450.36$540.29
35-Year-Old Male$267.05$311.47$522.55$616.84
40-Year-Old Female$277.99$321.24$543.99$636.39
40-Year-Old Male$326.33$375.62$639.80$745.14
45-Year-Old Female$349.30$381.29$685.30$756.49
45-Year-Old Male$401.58$467.84$788.99$929.59
50-Year-Old Female$429.14$470.02$843.68$933.94
50-Year-Old Male$499.36$578.12$982.80$1,150.14
55-Year-Old Female$549.89$598.79$1,082.55$1,191.49
55-Year-Old Male$629.30$727.97$1,239.61$1,449.84
60-Year-Old Female$700.83$769.94$1,381.36$1,533.79
60-Year-Old Male$802.33$988.97$1,582.18$1,971.84
65-Year-Old Female$912.58$1,045.09$1,800.93$2,084.09
65-Year-Old Male$1,043.61$1,310.87$2,060.36$2,615.64
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The rates for smokers is considerably higher.

Average Monthly Whole Life Insurance Rates for Smokers
Smoker Age & GenderForesters Financial
– $250,000 Policy
State Farm
– $250,000 Policy
Foresters Financial
– $500,000 Policy
State Farm
– $500,000 Policy
25-Year-Old Female$228.77$257.97$446.86$509.84
25-Year-Old Male$270.33$279.92$529.11$553.74
30-Year-Old Female$280.18$300.14$548.36$594.19
30-Year-Old Male$325.89$325.17$639.36$644.24
35-Year-Old Female$340.11$355.39$667.36$704.69
35-Year-Old Male$404.21$383.89$793.80$761.69
40-Year-Old Female$411.99$421.09$821.36$836.09
40-Year-Old Male$505.27$455.44$994.61$904.79
45-Year-Old Female$529.99$505.27$1,043.18$1,004.44
45-Year-Old Male$690.33$551.79$1,360.80$1,097.49
50-Year-Old Female$650.08$621.39$1,280.74$1,236.69
50-Year-Old Male$853.96$683.39$1,684.99$1,360.69
55-Year-Old Female$807.58$792.14$1,592.68$1,578.19
55-Year-Old Male$1,069.86$865.22$2,112.43$1,724.34
60-Year-Old Female$1,018.89$964.39$2,011.36$1,922.69
60-Year-Old Male$1,402.58$1,158.19$2,770.86$2,310.29
65-Year-Old Female$1,294.52$1,204.29$2,556.93$2,402.49
65-Year-Old Male$1,858.46$1,490.97$3,673.43$2,975.84
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As you can see, premiums are more affordable the younger you are when you apply. You can also save a lot by getting into shape and quitting any bad habits such as smoking.

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How does whole life insurance work?

To put it simply, it’s all in the name. Whole life insurance is permanent life insurance that will last until you die as long as you continue to pay your premiums. Because the insurance company is taking on more risk, and the accrual of additional wealth, this type of policy does cost more than term life policies.

See whole life insurance broken down below.

Another benefit of whole life insurance for seniors is that a portion of your premiums will be placed into a savings-like account that can be used in your retirement. Some insurance companies will even invest this whole life insurance cash value at an increasing rate to provide additional wealth that you can use in your retirement.

Some policies will place the policy into an investment that is dependent on the stock market or other mutual fund style accounts that can produce more wealth at much greater risk.

How Whole Life Insurance Premiums Are Divided

Premiums on this policy must be paid monthly or in a single-premium policy, which is paid in one lump sum at the time the policy is issued. Fees and commissions are taken off the top leaving very little, if any, savings at the end of the first year. See the video below about how your money will be divided.

After the first year, the cash value rate of return starts to grow annually. Fees cost policyholders around 7 percent monthly. A calculated amount is applied to the death benefit while the remainder is invested.

Whole Life Insurance Yields

Most people sit down with a financial planner or an insurance agent to calculate how much insurance they need. They also determine how much they can afford to pay in premiums, in addition to how long they need to pay into the policy to get the desired outcome. Rates of return will depend on the type of whole life policy issued.

Types of Whole Life Insurance

There are three main types of whole life insurance. Although they are similar products they vary and feature different combinations. The main three include:

  • Traditional Whole Life
  • Universal Life
  • Variable Life

Traditional whole life combines the death benefit with an investment that is made in stocks, bonds, or mutual funds. When a traditional policy is broken down into categories, they appear as these examples:

  • Participating – the commonwealth and policyholder shares dividends
  • Nonparticipating – commonwealth or insurance company takes the risk on investment return
  • Indeterminate – variable yearly premiums
  • Economic – the return on investments are used to purchase more term or death benefits

Several other traditional options exist, so if you’re wondering what is universal life insurance, know that it’s known for its flexibility in premiums, face value, and factors that determine the price. Or if you’ve asked what is variable life insurance, know that the value fluctuates.

Although there is a minimum guaranteed death benefit, the fluctuation in cash value is based on stock market conditions. Metlife whole life insurance is an example of universal life insurance.

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Whole Life Insurance vs Term

Whole life insurance isn’t your only choice when it comes to purchasing life insurance. While whole life insurance covers your entire life, term life insurance will cover a period of your life in which your loved ones would be particularly vulnerable.

See the video below for a better look at term life insurance and some scenarios for when it could be useful.

Because term life doesn’t offer cash value, it is usually cheaper. Term life insurance is often referred to as the most simple life insurance policy for those who don’t want to take the time to learn about the variety of policies.

The Best Time to Purchase a Whole Life Insurance Policy

A whole life policy is intended for your whole life, but it may not be the best option for someone over 50 unless they have an estate. The image below shows how whole life insurance benefits can be used.

The Role of Whole Life Insurance in Estate Planning

Whole life policies are good for estate planning since any amount under the federal exclusion of $3.5 million can be passed on to the next generation tax-free. A married couple may use the second-to-die provision which makes the policy non-taxable until the second spouse dies.

This type of policy may also be okay for a person or couple in their twenties or thirties who plan to have the coverage for more than 20 years, although this is also the demographic that may select term coverage for its low cost and ability to offer protection to children until they are able to take care of themselves.

It is in the later years that the whole life investment begins to grow exponentially. The first 10 years demonstrate slow growth.

Where to Find a Whole Life Insurance Policy

One of the most important aspects of purchasing a whole life insurance policy is to make sure the carrier is stable. A staple in the insurance industry with a well-known track record would be a good option. Most people have relatives and friends who are willing to share their experiences. Otherwise, the internet is a good place to find a whole life insurance calculator.

Whole Life Insurance Pros & Cons

The best feature of the whole life policy is the investment and savings option. You can also borrow from a whole life policy. Gifting is another good feature that allows the insured to gift the face value to a loved one or charitable organization tax-free. If the insured lives to age 100, they are no longer obligated to premiums, yet the insurance coverage continues.

Some cons that whole life insurance policyholders face are the decrease in the death benefit or face value in slow economic times, or if a loan is made against it. Although there is an investment option, there are other investment options that will yield a greater return.

The policyholder must decide if they want to tie up their money in this way, or in a way that will yield more money. A person over 65 will also pay higher premiums, especially if they have health issues.

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Whole Life Insurance: The Bottom Line

Purchasing life insurance is a wise decision that can protect and propel your family when you die. A whole life insurance policy takes this protection and expands it across your entire life. With this protection also comes the option for cash value that will add up to a large amount and help with any expenses in retirement. All of this comes together to make a policy that offers simple life-long coverage that will protect your family for many years to come.

Ready to find whole life insurance quotes online? Use our FREE quote tool to find out what you could pay each month.

Frequently Asked Questions: Whole Life Insurance

Below are some whole life insurance FAQs to help you fully understand whole life.

#1 – Is a whole life policy a good investment?

If you purchase a life insurance policy earlier in your life and pay into the cash value investment account, you will have the ability to use this cash value in retirement. Some companies will even invest your benefit at a guaranteed increasing rate so you get the most out of your investment.

#2 – Which is better, whole life or term life insurance?

The kind of life insurance you need depends heavily on your specific life and the relationships that lie therein. If you have a growing family or business, you may want term life to cover this time when your finances would be the most vulnerable. Whole life is a good idea for those who want help in retirement and the ability to leave an inheritance no matter when they die.

#3 – What is the best whole life insurance?

Much like whether you need whole or term, which type of whole life policy you need will depend on your life. Do you want the risk of stock investment, or would you prefer to have control over your premiums and death benefit? Your preferences will help guide you to the policy that will most benefit your family and loved ones when you pass.

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