What Is Whole Life Insurance?
What is it?
Whole Life is the most basic type of permanent life insurance. Depending on your age and health, your premium will purchase a specific death benefit and produce a specific cash value, which are guaranteed for the life of the policy as long as your premiums are paid. Whole Life premiums, while higher than term premiums, are guaranteed not to increase. In addition, Whole Life policies can earn annual dividends which are based on MetLife’s investment, mortality, and expense experience. Dividends are not guaranteed.
Who’s it for?
People who:
- have a lifetime need for insurance protection
- prefer the high degree of safety provided by the policy’s guarantees
- are attracted by the policy’s ability to build tax-deferred cash values
- like to know that their premiums will never increase
Benefits:
Over time, whole life insurance may be more economical than term insurance since premiums do not increase with age and the policy builds a cash value.
- Earnings, and certain withdrawals and loans, may qualify for tax-favored treatment.
- Policy loans and withdrawals provide access to your cash value.
- If you cancel the policy, the accumulated cash value is yours to use as you wish. Taxes may apply.
- Dividends can be taken in cash or used to increase the policy’s cash value and death benefit. This means that certain “dividend options” may be used to purchase additional insurance coverage each year, regardless of your health.
- Premiums are guaranteed not to increase over the life of the policy.
- A minimum death benefit is guaranteed.
- The cash value is guaranteed to grow at a specified, minimum rate.
Some Drawbacks to Consider:
- Premiums are initially more costly than term premiums, although they remain level for the life of the policy.
- Unlike term insurance, whole life insurance offers no conversion option.
- Loans, withdrawals and any unpaid loan interest generally reduce the death benefit, which could leave beneficiaries inadequately protected.
- If accumulating funds is a goal, keep in mind that dividends are based on insurer’s investment, mortality, and expense experience, and are not guaranteed. Certain riders, when added to your policy, provide you the opportunity to pay more premiums into a number of professionally managed equity-based portfolios.
Variable insurance products, including variable annuities and variable life insurance, are offered by prospectus only. The prospectus contains information about the product’s features, risks, charges and expenses, and the investment objectives, risks and policies of the underlying portfolios, as well as other information about the underlying funding choices. Read the prospectus and consider this information carefully before you invest. Product availability and features may vary by state. All product guarantees are based on the claims-paying ability of the issuing insurance company.
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