Whole life insurance is a unique, all-in-one, financial solution that works to protect and preserve your estate and legacy in the future, while helping you plan and self-finance many of life’s big purchases today. No other product on the market can cover so many of your financial needs simultaneously.

What is Whole Life Insurance?

Whole life insurance is permanent insurance that provides you with guaranteed coverage and protection for life. If you maintain your policy until death, your beneficiary will receive a tax-free death benefit that can be used to pay off any outstanding debts, funeral expenses, and estate taxes. The beneficiary funds are not subject to probate, but are often allocated in a legal will for this purpose. It is also common practice for a whole life policy to leave a legacy of funds to secure the beneficiary’s future. The death benefit could provide income to your loved ones and dependents, allowing them to maintain the same standard of living after you’re gone. If you establish a trust to manage the funds from your death benefit, it also helps to keep their inheritance intact while preserving your legacy.

How Whole Life Insurance Works

Whole life insurance has a cash value feature that puts it in a class of its own above other life insurance products. This cash value helps you to build guaranteed equity you can access and use while you’re still living. Imagine this equity as an asset you own and can leverage to finance anything you need whenever you want or use as a collateral for other types of financing. And when managed properly, the cash value of your policy can also provide you with a tax-free, retirement income when you stop working. It’s like owning your own personal, lifelong, savings account that continues to grow uninterrupted—even when you borrow from it!

Whole Life Insurance vs. Universal Life Insurance

Sometimes it’s easy to confuse universal life insurance with whole life insurance. Whole life insurance is really designed to be a long-term and secure savings vehicle that provides you with guaranteed cash value accumulation and consistent premiums. Universal life insurance, also a type of permanent insurance, has a cash value too, but since it’s invested in mutual funds and often other stock market investments, the subject to risk, volatility and potential loss of earnings on your cash value is greater. Therefore, it’s not an ideal long-term savings vehicle. For this reason alone, whole life insurance is preferential, and often sees a greater return on your money.

Participating Whole Life Insurance

Participating whole life insurance or dividend-paying whole life insurance as it is also calledis whole life insurance where a portion of your premium payment is collected and placed in a participating account. These funds are invested on your behalf by the insurance company managing your policy. This account is primarily impacted by returns on investments, by death benefits, expenses, taxes and contributions to surplus. Whatever funds remain from premiums after these factors are accounted for, flow into the participating account. These funds are pooled with funds from other policyholders and get invested by an asset management group using a top-down approach to ensure the best return for you and other policyholders. Any earnings from this participating account are then annually credited to your policy as dividend payments.

Benefits of Participating Whole Life Insurance

Though dividends are not guaranteed, many insurance companies manage the participating account so effectively, they’ve been paying out annual dividends for years, even in times when interest rates have been low. These dividends can be paid to you directly or used to pay down premiums. However, the best way to use your dividend payments is to actually purchase paid-up additions of insurance which supercharge the growth of both the policy’s death benefit and cash value over time, especially if structured properly, using any one of our Bank On Whole Life® methods. That’s why participating whole life insurance is a great mechanism for building wealththat will last generations.

Participating whole life insurance is a personal solution if you’re…

  • Wishing to generate a cash reserve that provide you with a potentially wealthy retirement income stream.
  • Wanting to create an education fund for your children.
  • Needing to replace your income so your family can maintain the same standard of living.
  • Intending to build a cash reserve that provides you with liquidity and you can leverage for major life purchases.
  • Desiring an alternative to mortgage insurance that gives you control and looks out for your best interests…not your bank.
  • Wanting to protect cash reserves against creditors, probate or taxes.
  • Planning to protect your family with a tax-free death benefit.
  • Wanting available funds to cover funeral expenses.
  • Having concerns with paying off any outstanding personal debts or loans upon your passing.

Participating whole life insurance is a business solution if you’re…

  • Wanting a solution that can protect your business, provide you tax-advantages and your retirement cash flow (by naming the corporation as your beneficiary).
  • Intending to protect your business interests by funding a buy-sell agreement to ensure a smooth transition of ownership and continuity from the deceased to surviving owners.
  • Wishing to fund key-person insurance to cover the cost of replacing and retraining a key employee and minimize disruption to your business.
  • Needing cash to pay off business debts or loans.
  • Wanting accessible liquidity and cash flow to keep your business running without having to tap into your personal savings.
  • Needing a solution to manage your assets and liabilities.
  • Desiring to leverage the cash value as borrowing collateral for a loan with a bank or lending institution to improve cash flow within your business.

We'd love to help you achieve your financial goals. Contact us.