Whole life insurance is one of the most popular types of permanent life insurance, a category of insurance that covers you for your entire life. (Term life insurance, on the other hand, is only valid for a specific period of time.) Since whole life insurance offers lifetime coverage and includes a cash value component, it costs significantly more than term.
Despite the high cost, many people choose whole life insurance because the convenience of lifetime coverage is worth the higher cost. Additionally, the cash value component of whole life insurance means that you can enjoy various benefits during your lifetime. The funds can be used to make a down payment on a home, supplement your retirement income, pay for children’s college tuition, fund a business venture, and more.
- Best overall: MassMutual
- Best reputation: Northwestern Mutual
- Best for customization options: New York Life
- Best for people with HIV: Guardian Life
- Best for riders: State Farm Life
- Best for military members: USAA Life
- Best for competitive prices: Protective Life
MassMutual
Pros
- Great reputation
- Excellent cybersecurity
- Participating policies may pay dividends
Cons
- Can’t get an instant quote online
- Can’t see the policies without talking to an agent
MassMutual, originally Massachusetts Mutual Life Insurance Company, was founded in 1851and has an excellent reputation. It’s rated A++ by AM Best and offers several whole life insurance policies. Participating policies may pay dividends, which can be used to pay premiums or for other purposes. Most policies provide you with opportunities to accumulate savings during your lifetime.
The only downside of MassMutual is that you can’t see the policies on their site or get an instant quote — you have to first connect with an agent. However, that’s also fairly typical for whole life insurance policies.
Northwestern Mutual
Pros
- Great reputation
- Excellent customer service
- Participating policies may pay dividends
Cons
- Can’t get an instant quote online
- Can’t see the policies without talking to an agent
Northwestern Mutual is one of the most trusted names in life insurance. Founded in 1857, the company has an A++ rating with AM Best and 96% of their clients stay with them year over year.
Northwestern offers whole life insurance policies with premiums that remain the same over the course of your lifetime. The policy’s cash value is tax-deferred, guaranteed to grow over time, never goes down, and can be used for any purpose. Like MassMutual, Northwestern requires you to connect with an agent in order to receive a quote.
New York Life
Pros
- Virtual meetings with financial professionals
- High level of customization
- Participating policies may pay dividends
Cons
- Can’t get an instant quote online
- Can’t see the policies without talking to an agent
Another veteran in the world of life insurance, New York Life boasts over 175 years of experience in the industry. It too has an A++ rating with AM Best. New York Life’s whole life insurance policies provide long-term protection, annual dividend potential, access to your cash value, usually tax-free, and premiums that can be customized and never increase.
New York Life is a good option for people who want a high level of customization. Each whole policy has a different balance of cash value accumulation and death benefit protection, so you can choose the balance that’s right for you. Policies can also be structured to let you choose how quickly your cash value grows.
Guardian Life
Pros
- Great reputation
- Offers policies to people with HIV
- Participating policies may pay dividends
Cons
- Can’t get an instant quote online
- Website lacks information about policies
Guardian Life is another long-standing life insurance company. Are you seeing a pattern yet? However, it’s not just the number of years that make an insurer great, but how they adapt with the times, relate to their customers, and of course, the types of policies they offer.
Like many of its competitors, Guardian Life doesn’t offer the option to get an instant quote for whole life insurance online. Its landing page for whole life insurance reads rather like a FAQs section, which can be good if you’re researching whole life insurance, but not good if you know the basics and just want to get started.
To find out what types of whole life policies the company offers and get a quote, you need to connect with a financial professional. The positive aspects of Guardian Life are that it offers term and whole policies to people with HIV and its policies come with several worthwhile riders. It also has an AM Best rating of A++.
State Farm Life
Pros
- Great reputation
- Website lists its whole policies
- Policies may pay dividends
Cons
- Not licensed in MA, NY, or WI
- Must contact an agent to get a quote
State Farm is one of the “newer” life insurance policies, founded in 1922. The company has an A++ rating from AM Best and offers several whole life insurance policies with level premiums and the possibility to receive dividends.
Policies include traditional whole life insurance with level premiums, single premium life insurance, limited pay life insurance, and final expense. Some policies come with riders that can give you additional coverage, like a waiver of premium for disability, guaranteed insurability option, accidental death, and more.
USAA Life
Pros
- Great reputation
- Transparent website
- You can get an instant free quote
Cons
- Limited policy options
- Only available to USAA members and their children
Founded in 1963, USAA is another “latecomer” to the insurance industry. Though it doesn’t have as many years behind it as some of the other companies, it has an excellent reputation and an AM Best rating of A++. It stands apart from other companies as an insurer that caters to USAA members only — people in the military, veterans, and their families. It’s also the only insurer on this list that offers an instant free quote for whole life insurance.
USAA offers whole life insurance as a way to pay for funeral and final expenses, leave a legacy to your loved ones, care for family members with special needs, or as a solution for estate taxes. USAA policies include free assistance to your survivors, a waiver of premiums for disability rider, and a guaranteed cash value growth. USAA also allows you to purchase a policy as a gift for your child or grandchild.
Protective Life
Pros
- Great reputation
- Useful online tools
- Competitive prices
Cons
- Can’t get an instant quote online
- Must contact an agent to get a quote
Protective Life was founded in 1907 and has an AM Best rating of A. It’s known for offering very competitive rates for people in good health and for those above the age of 60. Its whole policies include level premium payments, guaranteed death benefit coverage, guaranteed cash value accumulation (that grows tax-deferred), and fixed interest rates.
The site has several tools that can be helpful, like a policy finder and a life insurance calculator that helps you figure out how much coverage you need. But like most companies that offer whole life insurance, you’ll need to contact an agent to get a quote.
FAQs
Now you know the best whole life insurance companies, but do you need more information about whole life insurance in general? We’ve got you covered. Check out our FAQs below and feel free to contact us with any other questions you have.
What’s the difference between whole and term life insurance?
Whole and term life insurance are two very different products. Term, also known as “pure” life insurance, provides coverage for a specific period of time, as long as you pay the premiums. There is no cash value component, and once the term is over, you don’t have coverage anymore. For these reasons, term life insurance is significantly less expensive than whole life insurance, which has no term and does have a cash value component.
As the less expensive life insurance option, term tends to be more popular than whole. But when comparing the two types, there is no “better” or “worse.” The only thing that matters is what is most appropriate for your financial and family situation.
When you buy term life insurance, you get the benefit of low monthly premiums and guaranteed coverage for that specific term. But when the term is over, you may be left without coverage when you really need it. That’s a risk that most people take because the premiums are lower.
With whole life insurance, you pay higher monthly premiums, but there is no risk that your policy will expire. It’s in place for life. Additionally, these policies accumulate a cash value that can be used during your lifetime and also earn dividends (though the latter depends on the insurer).
If whole life insurance is something you can afford, the benefits are certainly worthwhile. Additionally, if you’re planning to pass on a large inheritance, whole life insurance can help cover the cost of estate taxes.
You can read more about term and whole life insurance here.
Is whole life insurance a good investment?
Whole life insurance comes with a cash value component, and some policies can pay dividends. But do these things make it a good investment? While there is no one-size-fits-all-solution, most financial advisors agree that whole life insurance is not a particularly good investment, since the fees are high and the returns relatively low.
In general, whole life insurance is mainly suited for people in a high tax bracket and who have maxed out their 401(k) and other retirement plans. For these people, it can be a valuable tool for estate planning, growing tax-deferred funds, or for helping a family member with a disability.
How much does whole life insurance cost?
There is no single answer to the question of how much whole life insurance costs. Each applicant gets their own quote. And unlike term life insurance, for which quotes are available easily online, whole life insurance is more complicated and you usually need to speak with an insurance agent to get a quote.
While the cost of a whole life insurance policy differs from person to person, the criteria that are examined are the same across the board. The criteria for determing the cost of a whole life insurance policy include:
- Age
- Gender
- Location
- Height and weight
- Health
- Smoking status
- Substance abuse
- Credit and driving history
- Hobbies/profession
- Amount of coverage
- Type of policy
- Riders
Insurance underwriters take all of these factors into account and perform statistical comparisons to determine how much you’ll pay in monthly premiums.
What other features does whole life insurance have?
There are several features that come with whole life insurance, though you have to make sure they’re included in the policy you choose since there are many different policies available. Typical features include:
- Customization of the payment period – You can choose to pay the policy’s entire cost in the span of a certain time period, as opposed to paying it every month for the rest of your life. (Of course, if you do that, the premiums will be very high.) Some policies offer the option to pay the entire cost in a single payment.
- Dividend crediting – Some policies pay out dividends, excess profits from the insurer after claims and operating costs have been covered. It’s important to check this issue before you buy a policy. If you choose a policy that does pay out, you can decide how to receive the payments. They can go toward paying the premiums of your policy, toward the cash value, or you can just receive them in cash.
Is there such a thing as whole no exam life insurance?
Traditional whole life insurance policies require a medical exam as part of the application process. No exam life insurance policies waive this requirement, but this convenience comes at a high price. There are both term and whole no exam policies available, but both types are almost alwyas more expensive than their traditional counterparts.
What types of whole no exam life insurance are available?
There are several types of whole no exam life insurance policies, but other than lasting your entire lifetime, they are very different than traditional whole policies.
Guaranteed issue is a popular type of whole no exam life insurance policy. As the name implies, anyone who applies is accepted. The entire application can be done online and no health questions are asked.
Why would someone get this type of policy? If you have serious health issues and can’t get approved for any other type of life insurance policy, guaranteed issue will give you coverage. The death benefit only goes up to $25,000, or in some cases, $50,000, but for people who are ill and want to leave something behind to their loved ones, this is better than nothing.
Guaranteed Issue policies often come with a two-year waiting period. The waiting period means that if the policyholder dies within two years of purchasing the policy, the death benefit is not paid out and only the premiums plus interest are refunded. The policyholder needs to live for at least two years after purchasing the policy in order for the beneficiaries to receive the death benefit.
Graded death benefit is a different type of whole no exam life insurance, very similar to guaranteed issue, except applicants must answer a few health questions. Also, instead of a two-year waiting period, there is a graded death benefit policy. If the policyholder dies within a year of purchase, only 25% of the death benefit is paid out. In the second year, 50% is paid out. In the third or fourth year, the entire death benefit is paid out. The benefit of this type of policy is that the premiums are a little lower than guaranteed issue due to the several health questions.
What are some riders that come with whole life insurance?
Riders, additional benefits that you can buy and add to your life insurance policy, can end up adding a lot of value for not that much extra money. Here are some common riders found in whole life insurance policies.
- Guaranteeed insurability – Allows you to increase your coverage without going through the whole application process again.
- Waiver of premiums for disability – Waives future premiums in the event that you become permanently injured or disabled.
- Accidental death – Pays out an additional death benefit if you die in an accident, sometimes as much as the policy coverage itself. This rider can effectively double coverage in the event of an accident.
- Accelerated death benefit – Enables you to get cash advances against the death benefit if diagnosed with a terminal illness.
Some policies come with other riders, so it’s worthwhile speaking to your insurance agent about what’s available before purchasing a policy.
Are there any other questions I should ask my agent about a whole life insurance policy?
There are so many insurers today, many with stellar reputations, that offer a variety of whole life insurance policies. How can you decide which company/policy is best for you?
One thing to look at is the rate of return on cash value. One of the benefits of whole life insurance is the accumulation of cash value, which grows tax-deferred and can be borrowed against. Whole life policies guarantee a minimum growth rate, but what’s the minimum? This is something that’s worthwhile finding out.
Additionally, you can ask several life insurance companies to provide projections of how each policy’s cash value can perform. Find out which parts are guaranteed and which aren’t. While this might seem like a lot of legwork, it’s actually standard due diligence to make sure you get the most value for your money.
If the thought of contacting various life insurance companies has you feeling overwhelmed and disheartened, Sproutt can alleviate your worries. Our insurance advisors can offer unbiased advice and information regarding types of policies and insurers. They are not affiliated with any particular company, so their goal isn’t to make sales — it’s to help you find the best policy.
