What is whole life insurance?

Whole life insurance is a type of permanent life insurance that is designed to provide coverage for the lifetime of the insured, as long as the premiums are paid. This means that the policy not only offers a death benefit to the beneficiaries upon the death of the insured, but it is also structured to remain active indefinitely, in contrast to term life insurance, which only provides coverage for a specified period.

One of the key features of whole life insurance is the guarantee of lifetime coverage. This policy accumulates a cash value over time, which can be accessed or borrowed against by the policyholder. Hence, it combines a death benefit with a savings component, making it a long-term financial planning tool.

This explained characteristic of whole life insurance, particularly its lifetime coverage guarantee, distinguishes it from options linked to term policies or those that are reviewed annually or strictly focused on investment growth. Each of those alternatives emphasizes different features not inherent to whole life insurance.