Life insurance can help you support the people who matter most once you’ve passed away. Your death benefit could pay for your funeral, cover your family’s daily needs, or provide an inheritance. While term life insurance is an affordable option for families on a budget, over half of people who own life insurance choose permanent coverage, according to LIMRA’s 2022 insurance barometer study.

If anyone depends on your income indefinitely, like a spouse or other family member who can’t work, or if you want to leave behind a legacy at any age, whole life insurance may fit your circumstances. Read on to learn whether whole life insurance could be the right choice for you.

What is whole life insurance and how does it work?

Whole life insurance is the most common type of permanent life insurance. Whole life lasts through the end of your life as long as premiums are paid. If you take out a whole life insurance policy, you identify a beneficiary who will receive a lump sum death benefit when you pass away.

Whole life policies also accrue cash value over time. You’ll pay a monthly premium that goes toward both the policy’s death benefit and cash value component. Then, the cash value accrues interest, sometimes at a guaranteed rate of return, depending on your policy. During your life, you can borrow against that cash value or make a withdrawal (with some potential tax implications). Any amount you don’t repay is subtracted from the death benefit, meaning there’s less money to support your beneficiaries.

To keep your policy active, you must continue paying premiums. Unlike some other types of permanent life insurance, whole life insurance premiums remain level throughout the policy’s lifetime. Cash value interest rates likewise remain level, so your cash value has guaranteed growth.

What is the difference between whole and term life insurance?

Term life insurance is the other major category of life insurance people purchase. Term life and whole life have two primary differences. Unlike whole life, term life insurance provides coverage for only a fixed period, usually between 10 and 30 years. After that time, your coverage ends unless you apply for a new policy or renew your existing one. In addition, term life insurance does not accumulate any cash value. For these reasons, term life insurance usually costs less than whole life insurance, even if the death benefits are equal.

What are the benefits of whole life insurance for adults?

While whole life insurance comes at a relatively high premium, its advantages may be worth the cost for certain adults. Some reasons to consider whole life insurance include the following:

• Cash value — Whole life insurance builds cash value over time. After a few years, you might have enough to borrow against or withdraw. While your death benefit can only payout after your death, you may be able to use the cash value when you need it.
• Tax-free death benefit — Your loved ones can receive your death benefit without any tax burden. That means you can use your whole life insurance policy to pass along a financial legacy to your children or grandchildren without estate taxes.
• Peace of mind — Whole life insurance policies offer lasting protection. They never expire, and death benefits are guaranteed as long as you pay premiums. You can take solace in knowing that, no matter when you pass away, your family won’t have to face economic distress.

What is the best whole life insurance for adults?

To choose the right whole life insurance policy for you and your loved ones, consider the answers to the following questions.

• How much coverage do you need?
• Do you have ongoing expenses like a mortgage?
• Do you have debts that your loved ones may inherit?
• Who depends on your income, and what will they need after you’re gone?
• Would you feel comfortable completing a medical exam as part of the application process?

As an older adult, you may find you don’t need as large of a death benefit as you once did during your working years. Major expenses, like the house or college tuition for your kids, could be behind you. Perhaps you don’t want to undergo a medical exam. In that case, you might consider Fidelity Life’s RAPIDecision® Senior Whole Life insurance, available to those between 50 and 85. With coverage amounts up to $150,000, senior whole life can provide a sufficient death benefit at a reasonable cost.

If you’d like whole life insurance but don’t want to complete a medical exam, have a smaller budget, or don’t need as much coverage, you might consider a final expense whole life policy. Fidelity Life’s RAPIDecision® Final Expense insurance offers a smaller death benefit to cover a funeral and other end-of-life expenses. These policies often come at a lower cost and don’t always require medical exams.

How much does whole life insurance cost for an adult?

Your whole life insurance cost depends on your unique circumstances. Age and gender impact premiums, and as you grow older, life insurance policies become more expensive. Whole life insurance for adults often has the best rate the younger you are, so the sooner you apply for coverage, the better.

The whole life insurance rate chart below demonstrates some average premiums for older men and women seeking $20,000 in coverage:

*Rates are for a customer in the standard rate class for a $20,000 simplified issue policy with an immediate death benefit. Rates current as of November 2021.

While this chart provides a helpful starting point, it’s not the complete picture. Other factors that could influence your rates include your personal and family health history, driving record, tobacco use, and lifestyle, especially if it includes any high-risk jobs or hobbies.

Is whole life insurance worth it for adults?

Whole life insurance often comes at a higher premium than term life insurance. However, many people find the extra expense worthwhile. The policy’s cash value offers adults savings they can tap into if needed. Because adult whole life insurance policies don’t expire, they can also help you leave your loved ones or even a charity you support with a tax-exempt financial gift.

If you’re looking for the most affordable option or only want coverage to support a specific expense like tuition or your mortgage, term life insurance may better suit your needs. Speaking with a licensed insurance agent at Fidelity Life can help you understand your options, or you can get started with a quote online.