Help protect your family’s future. Enter your zip code to get your free quote today!

Get Your Free Quote

Is Whole Life Insurance a Good Investment?

A whole life insurance policy can easily be significantly more expensive than a term life insurance plan. Before you buy a whole life insurance policy, talk to a licensed agent about whether it’s a good investment for you.

Child makes a wish on danelion

Cash Accumulation

In addition to a death benefit, most whole life insurance policies offer a savings or investment component.

When you make premium payments on a whole life insurance policy, part of that payment goes towards paying your death benefit, and another part goes into an investment account (on a tax-deferred basis). Over time, as you pay premiums on the policy and continue to earn interest, your policy builds a cash value.

Borrowing Against the Cash Value of Your Policy

While you’re still living, you can borrow or withdraw from the cash value of your policy. Some policyholders find this appealing because they can access the cash value while they’re still alive, although it generally accumulates interest and reduces the death benefit until you pay it back.

When Is It a Good Investment?

If you have the ability to pay the higher premiums consistently, there can be advantages to owning a whole life insurance policy. A whole life policy may be beneficial for you if:

  • You’ve maxed out your other tax-deferred investment options (401k, IRA, Roth IRA)
  • You want to use it for estate planning purposes because you’re set to owe federal or state estate taxes on your assets

Is Whole Life Insurance Worth It?

For most, there are better ways to build wealth than a whole life insurance policy. Although they have a guaranteed investment return, investment growth is slow and the return is modest (generally around five or six percent interest before fees).

Learn More

For more information about life insurance, read through some of our guides below.

*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.

Help protect your family’s future. Enter your zip code to get your free quote today!

Get Your Free Quote

Related Information

Types of Life Insurance

There are two main types of life insurance: permanent life insurance and term life insurance.

Read More

What Is Non-Life Insurance?

Non-life insurance is simply any type of insurance besides life insurance. Learn about some of the types of non-life insurance and which may be right for you.

Read More

How to Shop Term Life Insurance for Seniors

Term life insurance and permanent life insurance are both options for seniors, though some life insurance companies may have age restrictions on their policies.

Read More

Minimum Age For Life Insurance

Looking for a life insurance policy? Here's what you need to know, including the minimum age for life insurance.

Read More

Life Insurance 101

Life insurance 101: How well do you understand your life insurance coverage?

Read More

Why Some Life Insurance Rates are Affected by Your Age

Your age affects the costs of life insurance rates. Learn more about term life and permanent life insurance to compare their expected costs.

Read More

Is Life Insurance Important? 9 Reasons for Getting Protection

Is life insurance important? Here are nine important reasons why you should consider purchasing a life insurance policy.

Read More

Types of Term Life Insurance

Learn more about term life insurance to decide if it is the right life insurance option for you.

Read More

Here’s Everything You Need to Know About Life Insurance

This primer will help you learn how life insurance works and the different life insurance options you have to choose from.

Read More