What are some pros and cons of whole life insurance?



  • Predictable, in most cases premiums are fixed for the life of the insured.
  • The beneficiaries receive the death benefit no matter when the insured dies, as long as premiums were paid.
  • The policy may build up cash value, which grows tax deferred.
  • If you surrender the policy at a later date, the cash value, if any, will be returned to you.
  • If you stop making premium payments you can receive the cash value or use that cash value to provide a paid up insurance benefit. The company must provide either extended term insurance coverage or reduced paid paid-up coverage. While it is not required that both options be offered many companies do make both available.
  • Cons:
  • A more complex product than term life insurance.
  • Higher premiums than term life insurance.
  • Could be costly if coverage lapses early.