Understanding Whole Life Insurance Policies

Summary: Whole life insurance offers lifetime coverage, a guaranteed death benefit and a cash value component you can use while alive. Guaranteed whole life policies are available without medical exams and may help cover final expenses or leave a small inheritance.

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Life insurance is one of the most reliable ways to help protect your loved ones financially. A whole life insurance policy is attractive because it doesn’t expire and includes a built-in savings feature. Here’s what you need to know, especially if you’re considering guaranteed whole life insurance.

What is whole life insurance?

Whole life insurance is a type of permanent life insurance that provides lifetime coverage. Unlike term insurance, it doesn’t expire after a set number of years. Whole life insurance has two main valuable benefits: a death benefit and a cash value component.

Death benefit

The death benefit is the policy’s face value and is paid out upon your passing. It’s a flexible lump sum payment that you can use to help cover your final expenses or however you see fit.

Cash value

The cash value part of a policy is similar to a savings account. Part of your monthly whole life insurance premiums goes toward paying the policy, while another part goes into a cash value account. The money grows at a guaranteed interest rate. You can borrow against it, withdraw the money you’ve paid into the account, use it to pay your life insurance premiums and more while you’re still alive. You don’t have to repay the loan, but the amount you’ve borrowed will be deducted from your death benefit when you pass away.

Understanding life insurance

Guaranteed whole life is for people who may not qualify for regular whole life insurance because of their age or health. Death benefit options are often less than traditional policies, such as up to $50,000.

Some companies don't require medical exams or answering any health questions to qualify.

You can enroll if you’re between the ages of 45 and 85 (or 50 and 75 in New York) and buy coverage from $2,000 to $25,000 (or $5,000 to $25,000 in Washington). Your premiums never increase, and your benefits are never canceled, for as long as you pay your premiums.

How does a whole life insurance policy work?

Once you pass away, your beneficiaries receive the whole life insurance policy’s death benefit, typically as a tax-free lump sum. If you had any policy loans or unpaid premiums, it could reduce the death benefit. Any cash value in the policy isn’t passed to beneficiaries unless you have a policy rider or add-on for this feature.

Many seniors buy a policy to help cover their final expenses or leave a small inheritance for loved ones. Final expenses can easily run over $9,000 for a traditional burial, so a life insurance policy can help provide significant financial relief for family members who would otherwise cover costs out of pocket.

Use Mutual of Omaha’s final expense calculator to see what you might expect to pay so you can strategize accordingly for your end-of-life planning.

Some policies have a graded benefit period, like all guaranteed issue policies. If you pass away from natural causes during the two-year waiting period, your beneficiary might only receive the premiums paid plus interest instead of the full payout.

When you’re 100 (or 120 in Florida), we’ll pay you your policy’s face value minus any outstanding policy loans and accumulated loan interest. If you pass away before these ages, your beneficiaries receive the death benefit.

How does a whole life policy benefit me?

One benefit of a guaranteed whole life policy is that you can leave a small inheritance for loved ones as part of your legacy. You can also leave a legacy to your grandkids with a child’s whole life insurance policy.

Another benefit of guaranteed whole life insurance is that it can ease the financial stress for a family who would need to pay for your final expenses, allowing them to focus on grieving. Moreover, you can use your accumulated cash value to cover unexpected expenses, such as medical bills or caregiving costs. However, it can take years for your policy’s cash value to reach a significant amount.

How much does a policy cost?

United of Omaha, a Mutual of Omaha company, guaranteed whole life policies start at less than $12 monthly for $3,000 of coverage for males and females. Here’s an idea of what you can expect to pay for a $10,000 death benefit as of this writing:

$10,000 Death Benefit

Only three factors affect how much you’ll pay monthly for a United of Omaha policy:

1Small annual gifts to younger generations: Younger applicants pay less. Rates increase on your birthday.

1Your gender. Premiums for men are higher because of life expectancy differences.

1Your coverage amount. Premiums go up with the death benefit.

How to apply for a whole life insurance policy

Applying for a whole life policy through United of Omaha can be done online in as little as five minutes. You just need to:

You’ll receive instant coverage once your payment is confirmed. There’s no waiting period for the policy to take effect.

Managing your policy

Once you have a policy, you can manage it through the Mutual of Omaha customer access portal. Some things you can do are:

• Review your policy
• Update personal billing information
• Pay your premium
• Update beneficiary information
• Track your policy value
• Request a loan

Updating your life insurance policy when there are changes can ensure your loved ones are protected, your final wishes are honored, and your coverage still reflects your current needs and stage of life.

How to claim life insurance

Your loved ones can file a claim online or by calling 888-493-6902. They’ll need your full name, date of birth and death, cause of death and policy number. A claims specialist will contact the person who filed the claim within one business day to finish the claims process.

Frequently asked questions (FAQs)

Who is a guaranteed whole life insurance policy a good fit for?

Guaranteed whole life insurance may be best for seniors who want to leave a death benefit to family as part of their legacy but don’t qualify for standard whole life policies because of their health. Guaranteed whole life doesn’t consider your medical history as an eligibility factor.

How is whole life insurance different than term life insurance?

Whole life insurance doesn’t expire like term life insurance, as long as you pay your premiums. Premiums are higher than term life insurance because beneficiaries are guaranteed to receive a payout. Whole life also has a cash value component.

Is it easy to cancel a whole life insurance policy?

Yes. If you change your mind, you can cancel within 30 days of your policy’s issue date. United of Omaha, a Mutual of Omaha company, will refund the premiums paid. After 30 days, you can still cancel, but there are no refunds. You may receive some cash value if your policy has it.