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What is Whole Life Insurance and How Does It Work?

Life insurance is a versatile financial tool that can help benefit people of many backgrounds and life situations. It can help protect loved ones, offer a way to help protect wealth, and assist with estate planning. Whole life insurance, offering lifelong coverage and protecting your wealth, is one of the more popular policy types. This article will explore whole life insurance’s features and benefits and compare it to term life insurance to help you determine if this policy is right for your needs.

What is whole life insurance?

Whole life insurance is a permanent life insurance policy that offers a substantial death benefit to your loved ones when you pass away. A portion of each premium payment you make goes toward your policy’s cash value growth component. Your cash value will typically grow tax-deferred at a fixed interest rate.1

Whole life insurance features 

Whole life insurance comes with several features that are crucial to understand:1

Lifelong coverage

Whole life insurance coverage lasts for life if you remain up to date on paying your premiums. This provides added peace of mind since you won’t have to worry about your coverage expiring.

Death benefit

The death benefit is the sum that is paid out to your beneficiaries if you pass away during the policy term. This payout can help your beneficiaries replace your income, pay off debts, and save for the future.

Level premiums

Whole life insurance has level premiums, meaning they do not change once you get your policy. This can allow payments to fit easily into your budget.

Cash value 

Cash value is a growth component that receives part of each premium. As mentioned earlier, it can grow tax-deferred at a fixed, guaranteed rate to help you protect your wealth and keep pace with inflation.


Riders let you add specific additional coverage to your policy. Some are free, while others can be added to your policy at a cost. For example, you can add an inflation rider to a whole life policy that raises your death benefit by a specified percentage every year based on inflation. As a result, you can reduce the impact of inflation on your death benefit and leave more money to your beneficiaries.

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How to use the cash value of a whole life insurance policy

When your policy’s cash value grows enough through premium payments and interest earnings, here are two ways you can tap into it:

  • Loans: You can borrow from your cash value at low interest rates with no fixed repayment date. The policy only lapses if the loan exceeds the cash value.
  • Withdrawals: Withdrawals are also allowed, but they may reduce the death benefit and incur tax liabilities.

Additionally, you can receive the cash value minus surrender charges if you ever surrender your policy.

How much does whole life insurance cost?

Below are the average monthly whole life insurance costs, by age, for healthy, non-smoking men and women.1 Please note, these are average costs, and Aflac's premiums may vary due to certain situations. They do not imply coverage.

Men Women
30 $388 $335
40 $586 $495
50 $930 $787
60 $1,596 $1,329
70 $2,777 $2,341

Whole life insurance vs. term life insurance

Here are some important differences between whole and term life insurance:

  • Coverage length: Term life insurance typically lasts for 10 to 30 years, depending on your chosen term. Whole life insurance lasts for life.
  • Cost: Whole life insurance tends to be more expensive than other policy types due to the lifelong coverage and cash value growth component.
  • Cash value: Unlike whole life insurance, term life insurance does not have cash value.

Should I get a whole life insurance policy?

Here are some situations where whole life insurance could make sense for you:

  • You need lifelong coverage and can afford the higher premiums: Whole life insurance doesn’t expire as long as you keep up on premiums, making it useful if you need coverage for life.
  • You have more complex financial and investing needs: The cash value component offers a vehicle to protect wealth if you need additional ways to save.
  • You have lifelong dependents: If you have loved ones that require lifelong care or support, such as children with special needs, a whole life insurance policy may be a good fit.
  • You’d like to enhance your estate plan: The whole life insurance death benefit can potentially reduce estate taxes and allow you to pass more wealth to your heirs when structured properly.

Get Aflac whole life insurance 

Now that you know how whole life insurance works, it’s time to decide whether this type of policy is right for you. If you think whole life insurance can meet your needs, Aflac is here to help you get insurance coverage that suits your budget. Speak with an agent today to explore your options and get a quote.

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