Whole life insurance: benefits and considerations
Whole life insurance is designed to provide coverage that lasts your entire life. This can be why people in or near retirement may find whole life insurance appealing. Here’s an overview of how this type of coverage works, considerations for people evaluating coverage later in life, and some key points to keep in mind.
Whole life insurance: how it works
Whole life insurance, which is also known as permanent life insurance, is generally intended to:
- Provide protection for a lifetime: Coverage remains active for life, as long as premiums are paid and your application doesn’t contain any misrepresentations of your health.
- Build cash value: A portion of each premium contributes to a cash value that accumulates over time, which you may be able to borrow against once available. Any outstanding loan balance, including interest, will reduce the policy’s death benefit and could affect the policy’s value if not repaid.
- Offer costs that are predictable: Premiums generally won’t increase with age, making them stable. This may make budgeting easier.
Things to perhaps keep in mind
Whole life insurance might offer certain guarantees, but it may be important to consider your needs and budget before you purchase:
- Health: Some coverages for older adults offer simplified underwriting or nomedical-exam options, depending on eligibility.
- Cost: Premiums are typically higher than term life insurance because coverage typically lasts for life.
Considerations for people evaluating coverage later in life
When planning for the years ahead, older adults may value the guarantee of whole life insurance, such as:
- Predictable premiums: Knowing costs typically won’t change may help with retirement planning.
- Cash value access: Whole life coverage can build cash value over time, which you may be able to borrow against once available, subject to coverage terms.
- Coverage for life: Whole life insurance is designed to provide coverage for life, as long as required payments are paid on time.
Some potential advantages of whole life insurance—lifetime coverage, and level premiums. Some people find these features helpful when planning for long-term coverage. Whole life insurance provides important features that remain in place as long as required payments are paid.
This article is provided by New York Life for informational purposes only. Neither New York Life, AARP, nor its affiliates provide tax, legal, financial, or accounting advice. Please consult your own professional for advice specific to your circumstances.
