Questions to Ask Before Buying Whole Life Insurance

Thinking About Whole Life Insurance? Ask These 7 Questions First

Buying whole life insurance is a big decision—it’s a lifelong commitment with financial benefits that extend beyond just a death benefit. But how do you know if it’s the right choice for you? Before signing up, ask these key questions to make sure you’re getting the best policy for your needs.

1. How Does Whole Life Insurance Work?

Whole life insurance provides permanent coverage as long as you pay the premiums. Unlike term life insurance (which expires), it also builds cash value over time—a savings component you can borrow against or withdraw from.

2. What Are the Benefits?

• Lifelong coverage – Your family is protected no matter when you pass away.

• Guaranteed cash value growth – Acts like a savings account with tax-deferred growth.

• Fixed premiums – Your payments never increase, making budgeting easier.

• Potential dividends – Some policies pay dividends, which can reduce premiums or increase cash value.

  
  

3. Can I Afford the Premiums Long-Term?

Whole life insurance costs more than term life. Ask yourself:

• Can I comfortably pay these premiums for 20, 30, or even 50 years?

• Will this fit my budget even if my financial situation changes?

  
  

4. How Does the Cash Value Work?

The cash value grows slowly at first but increases over time. Consider:

• Can I borrow against it? (Yes, but unpaid loans reduce the death benefit.)

• What’s the surrender period? (Early cancellation may come with fees.)

• How can I use it? (Retirement supplement, emergency fund, or major expenses.)

  
  

5. What’s the Insurance Company’s Financial Strength?

You want a company that will be around for decades. Check ratings from agencies like:

• A.M. Best

• Moody’s

• Standard & Poor’s

  
  

6. Are There Riders or Customizations Available?

Some policies offer riders (add-ons) like:

• Waiver of premium (pays premiums if you become disabled).

• Accelerated death benefit (early payout if diagnosed with a terminal illness).

  
  

7. Should I Consider Term Life Instead?

If you only need coverage for a set period (like until retirement or paying off a mortgage), term life is cheaper. But if you want lifetime protection + savings, whole life could be worth the cost.

Whole life insurance isn’t for everyone—but if you want permanent coverage, cash value growth, and financial stability, it’s a strong option. Compare policies, ask these questions, and talk to a trusted advisor before making your decision.