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Do I Need a Whole Life Insurance Policy and How to Find One?

You want a whole life insurance policy that’s within your budget, gives options to customize coverage for your needs, and comes from a company with a solid financial rating and excellent customer service.

So, how do you find it?

Do You Actually Need Whole Life Insurance?

Whole life insurance isn’t for everyone; in fact, term life insurance meets the needs of most families.

So, the first step in getting the best whole life policy is making sure whole life insurance would benefit you at all.

Typically, whole life insurance policies benefit people who:

  • Can comfortably afford the higher monthly premiums.
  • Have a substantial estate and want help planning.
  • Are interested in a savings and investment tool.
  • Want to provide for heirs and inheritances.
  • Have a special needs dependent who needs lifelong support.
  • Want to provide the funds to help keep your family business running.

On the flip side, term life insurance policies are best for families on a budget who simply want good, solid coverage for a specific amount of time.

For more help deciding, refer to The Differences Between Term & Whole Life Insurance.

Top Sellers of Whole Life Insurance

Finding the best whole life insurance policy also means finding the best whole life insurance company, right?

Below, we’ve listed a few of the top sellers of whole life insurance. Understand that this is not a complete list of insurance companies; rather, it showcases some of the specific options from a variety of major top-rated insurance providers.

Insurance CompanyWhole Life Policy Options
Guardian Life Insurance- Offers a survivorship policy; two people, such as a married couple, can be insured on one policy.
- Offers policies to healthy individuals with HIV.
MassMutual- People between the ages of 40 and 80 can get a policy of up to $25,000 with no medical exam.
- The SpecialCare program provides financial planning for families with special needs children.
Mutual of Omaha- Company guarantees up to $25,000 coverage for people between 45 and 85.
- Offers whole life insurance policies for children.
New York Life- Customers can choose from a standard policy, a value policy with cheaper premiums, and a custom policy to more quickly build cash value.
- Potential to earn dividends.
Northwestern Mutual- Can get a whole life insurance policy with a term life component.
- Can design policies with different premium payment periods.

Aside from researching the company that provides the coverage options you need, you’ll also want to:

  • Check each company’s financial rating. Financial strength is important because the company needs to be able to pay claims decades from now, especially in the case of whole life insurance policies which last until the end of your life. Helpful resources include AM Best and the National Association of Insurance Commissioners.
  • Research each company’s customer service. You can compare each company’s complaint ratio score with the NAIC. Additionally, you should pay attention to your own experience with the company’s customer service when you personally speak with representatives about policy options, quotes, and more.

Finding the Best Whole Life Insurance Policy

Once you feel comfortable with a couple of life insurance companies, it’s time to get diligent about finding the best whole life insurance policy. Get a solid grasp of the tips below, but remember it’s wise to seek assistance from a life insurance agent or even a financial advisor.

1. Figure Out How Much Coverage You Need

How much coverage you need depends on what you want your whole life policy to accomplish.

For example, the more you want your policy to do — set up an inheritance, take care of a special needs dependent, handle estate planning — the more coverage you need.

On the other hand, the less you want your policy to cover — say, just funeral and burial expenses — the less coverage you need. Of course, term life insurance policies are better suited, and more affordably priced, for smaller coverage policies.

2. Determine Whether You Need a Rider

A rider is a coverage feature you can add to your whole life insurance policy. It provides additional coverage for a specific situation at an additional cost.

Some common life insurance policy riders include:

  • Disability Income Rider: Pays an income if the policyholder becomes completely disabled. Additionally, some companies offer a Waiver of Premium Rider which waives the premium if the policyholder becomes disabled.
  • Guaranteed Insurability Rider: Protects the policyholder’s coverage (and future coverage) in the event their health seriously deteriorates.
  • Accidental Death Benefit Rider: Provides an increased death benefit in the event of an accidental death (rather than an illness).
  • Accelerated Death Benefit Rider: Death benefit payout before the policyholder dies; applies in certain circumstances.

Rider availability and cost vary by insurance provider, so make sure you find the providers that offer the rider that you want.

3. Examine the Cash Value’s Rate of Return

The “cash value” is the savings account component of a whole life insurance policy. A portion of your premium goes into the account, and the account slowly grows (at a guaranteed minimum growth rate, at least) and typically on a tax-deferred basis. 

You can continue saving the money, or:

  • Borrow against the cash value when you need extra money in an emergency.
  • Use the accumulated cash to buy more coverage.
  • Surrender the entire policy for the cash.

Policies that earn dividends can perform even better; dividends aren’t always guaranteed, so talk to the agent about these.

When you shop for a policy, ask about how the cash value projections and which aspects are guaranteed.

4. Apply for the Best Approval Process

The main kinds of application and approval processes are:

  • Full Underwritten: Usually involves a long application and undergoing a medical exam.
  • Simplified-Issue: Answer some health-related questions; no medical exam.
  • Guaranteed-Issue: You’re accepted with no medical exam and no health-related questions.

Even if you have some health problems, you might get a better deal applying for a fully underwritten life insurance policy. That’s because simplified-issue policies and guaranteed-issue policies usually:

  • Premiums are higher.
  • Death benefits can be relatively small.
  • Only partial death benefit payout if you die within a set number of years of coverage.

The death benefits offered are relatively small, and the costs per $1,000 of coverage are higher than for policies that require a medical exam. In addition, these policies don’t pay the full death benefit if you die within the first few years of coverage.

5. Compare Multiple Quotes

This one’s a no-brainer, right?

Get an overall (or definite) idea of how much coverage you want, the kind of riders you need, the kind of cash value you’re looking for, and whether or not you want to undergo a medical exam. Then, using that information, get quotes from multiple life insurance providers and see who offers the best coverage for the most affordable premium.

>>MORE: How to Buy a Life Insurance Policy?

Final Thoughts

  • Determine whether a whole life insurance policy is right for you and your family. Term life insurance policies are better suited for many families, and there’s no reason to spend extra money on a policy — and a bunch of coverage options — you don’t need.
  • Research various life insurance providers, paying attention to the kinds of policy options they offer, their financial rating, and their customer service reviews.
  • Before you begin shopping for a policy, it’s helpful to nail down the amount of coverage you want as well as other policy options like riders, cash value accumulation, and application and approval processes. Going into the shopping process with this information will help you find a policy that suits your needs and doesn’t break the bank.
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