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Insurance Life Insurance

Best Whole Life Insurance

Life insurance provides financial protection to the people you love if you die. If you have a life insurance policy and you pass away, your beneficiaries get a death benefit as long as you’ve met policy requirements. The death benefit can replace the income you would have provided to your family if you hadn’t passed away.

If you’re using life insurance as an investment, the rate of return on your policy’s cash value will also likely be lower than other investment vehicles such as investments in a 401(k).

If you’ve decided to buy life insurance, there are different types you could buy including term life insurance and whole life insurance or permanent life insurance. Term life insurance coverage lasts for a limited period of time and  its only purpose is to provide a payout to beneficiaries in the event of the policyholder’s death. Common terms are 10, 20 or 30 years for term life policies, and buying these policies is less expensive than buying whole life insurance.

Whole life insurance, on the other hand, is a permanent insurance policy that can provide lifetime coverage. There’s an investment component with whole life insurance, as policies accrue a cash value over time. With whole life policies, the death benefit is guaranteed and the rate at which the cash value account grows is guaranteed. Compared to term life insurance, a whole life insurance policy is a reliable, steady investment as opposed to just a risk deterrent.

In this guide:

Best Whole Life Insurance Companies

When buying whole life insurance, you should always compare policy quotes from a minimum of three whole life insurance companies to ensure you’re getting the best rate.

Northwestern Mutual 

This Milwaukee, Wisconsin insurer was founded in 1857 and offers not just insurance but also investment advisory service and financial products. Here’s what you need to know about its whole life coverage from Northwestern Mutual:

  • AM Best Rating: A++
  • Issue age: 1880
  • Medical exam required: Yes
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New York Life

New York Life was founded in 1845 and is now the third largest life insurer in the United States. It offers whole life, universal life, variable universal life, and term life coverage. Here’s what you need to know about whole life insurance from New York Life. 

  • AM Best Rating: A++
  • Issue age: 1890
  • Medical exam required: Yes
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Nationwide dates back to 1926 and provides whole life insurance as well as a variety of other types of insurance coverage. Here’s what you need to know about whole life insurance policies from Nationwide. 

  • AM Best Rating: A+
  • Issue age: 1895
  • Medical exam required: Yes
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Pacific Life

This Newport Beach, California based insurer dates back to 1868 and provides both insurance and financial services, including term and whole life insurance coverage. Here’s what you need to know about whole life coverage from Pacific Life. 

  • AM Best Rating: A+
  • Issue age: 1880
  • Medical exam required: Yes
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Protective Life

This Birmingham-Alabama based insurer dates back to 1907 and provides both whole and term life insurance coverage. Here’s what you need to know about whole life insurance from Protective Life. 

  • AM Best Rating:  A+
  • Issue age: 1875
  • Medical exam required: Yes
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Guardian Life

Guardian Life Insurance has its headquarters in Manhattan and dates back to 1860. It offers a wide variety of insurance coverage options including dental and vision insurance, disability coverage, and term and whole life insurance. Here’s what you need to know about whole life insurance from Guardian Life. 

  • AM Best Rating: A++
  • Issue age: 1875
  • Medical exam required: Yes
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Mass Mutual

Mass Mutual is based out of Springfield, Massachusetts and dates back to 1851. The company provides many different insurance solutions, along with retirement planning help and annuities. Here’s what you need to know about whole life insurance from Mass Mutual. 

  • AM Best Rating: A++
  • Issue age: 1880
  • Medical exam required: Yes
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State Farm

State Farm is headquartered in Illinois, and it dates back to 1922. It is the largest property and casualty insurance provider in the United States, and it offers automobile insurance and home insurance as well as term and whole life insurance coverage. Here’s what you need to know about whole life insurance from State Farm. 

  • AM Best Rating:  A++
  • Issue age: 1875
  • Medical exam required: Yes
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What Is a Whole Life Insurance Policy?

A whole life insurance policy is a type of permanent insurance policy. Whole life insurance is also called cash value life insurance. Whole life insurance not only provides coverage for your whole lifetime – unlike term insurance – but it also serves as an investment account. When you have whole life insurance and pay premiums, part of those premiums goes into the investment account, which accrues a cash value. 

As with other types of investment accounts, the cash value earns returns and grows over time. When you cash out your whole life insurance, you receive the cash value of your policy minus any applicable fees. 

The cash value of a life insurance policy is different from the death benefit. While the death benefit is paid to your beneficiaries after you’re gone, you can draw from the cash value on your account if you need to cover a large expense during your lifetime, such as a new home or educational expenses. 

Cash value policies can take a long time to grow, particularly since much of your premium goes toward insurance and fees during the early years of coverage, rather than the cash value account. Whole life insurance can be significantly more expensive than term life, and many insurance buyers determine term life is better for their needs because of this. 

If you’re trying to decide whether to buy a whole or term life policy, some key things to know include the following:

  • You’re covered for life with a whole life policy, and whole life policies are often included as part of a larger estate plan
  • A portion of the cash value of a whole life insurance policy can be borrowed against or withdrawn during your lifetime
  • It can take anywhere from 12 to 15 years for a whole life policy to accumulate a decent cash value

How Do I Choose the Right Whole Life Insurance Policy?

For most people and families, term life insurance is a better option than whole life coverage because it provides cheaper coverage and a sense of security. You can invest the money you save on premiums in a traditional investment account. 

Term life insurance provides only death benefits and only if you die during the coverage term. If you want your coverage to go beyond the term, you have to renew your policy. Term life insurance gets more expensive the older you get. Many term life policies can also be converted to whole life insurance. 

If you are relatively young with children and you’re the primary income-earner in your family, term life may be better than a whole life policy because of its increased affordability. However, if you do want whole life insurance, there are some things to keep in mind when comparing quotes, including the following.

How Healthy is the Company?

With any investment or insurance product, you want to ensure it’s backedby a company with a strong reputation and a strong financial strength rating. You can research the financial standing of a whole life insurance company when comparing policies by looking at ratings from third-parties such as A.M. Best.

A.M. Best is a global credit rating agency that focuses solely on the insurance industry. When a company has a strong A.M. Best rating,it’s an indicator of creditworthiness and financial strength. 

What’s Your Goal?

Before deciding on a whole life insurance company or policy, know what your personal goals are. What do you hope to achieve through the purchase of a whole life policy? If you want to pay off a mortgage, you can choose an amount of coverage close to what your remaining balance on your mortgage is.

If your primary goal is covering your funeral or burial costs, you can opt for a lower-cost policy with minimal coverage. If you want to cover the costs of children’s education, then you might need a higher coverage limit. 

What Riders Do You Need 

A rider is something you can add to your insurance policy that will expand your coverage. Riders cost more but are a useful way to create a tailored insurance product to fit your needs. 

An accelerated death benefit rider is one example. With this rider, the covered person receives a cash benefit while they’re alive if they develop a terminal disease. Once the covered person passes away, beneficiaries receive a reduced death benefit. 

To decide what riders you need, think of your goals for securing coverage and ask your insurer what types of add-ons are available to customize your policy. 

What’s the Cash Return?

Whole life insurance policies offer a guaranteed rate of return, making it a safe and stable investment. 

Some whole life insurance policies have a higher rate of return than others, so this can be a differentiating factor when choosing coverage. Remember, though, if you do the math, you might see having a cheaper term life policy and a mix of other investments is a better financial decision than buying whole life insurance.

What Do I Need to Apply for Whole Life Insurance?

Some of the information you’ll need to apply for a whole life policy may include:

  • Your salary
  • Your outstanding debts
  • Current or past medical diagnoses
  • List of your prescription medication
  • Beneficiary information
  • Information to contact your primary care doctor

The process to apply for life insurance typically involves the following steps:

  • You’ll get a quote either online or by phone
  • Once you get a quote, you can speak to an insurance agent who may ask you about your medical history and other factors that could affect your costs
  • You’ll complete a full application
  • Most, but not all, life insurance policies require a medical exam to determine eligibility and to set your final premium payments 
  • After your medical exam, the process of underwriting starts. This involves an assessment of the likelihood you’ll pass away soon after buying coverage

If you aren’t in good health, there are some whole life and term life insurance companies that don’t require a medical exam or blood tests. The coverage limits are lower, but these policies can be the best option if you have a health condition.

Always Compare Prices

Finally, there are a lot of options available for term life and whole life insurance. The rates could vary significantly as could factors such as the rate of return, so make sure you compare and get a quote from at least three insurers before selecting the policy that’s right for you.