5 Reasons to Consider Whole Life Insurance

Whole life insurance is a powerful financial tool for you and your family. Here are five reasons why you may want to add whole life insurance to your financial portfolio.

whole life family

1. Whole life insurance can protect your family

Whole life insurance offers death benefit protection that can keep your family financially secure in case you pass away. And because you are fully protected with your first payment, it can also be a good way to leverage your money.


2. Whole life insurance allows you to pursue cash value growth that is not subject to market risk

Whole life insurance has guaranteed cash value growth1 that builds at a steady, dependable pace. That allows it to complement fixed-income investments in your portfolio. New York Life offers the ability to customize your policy by setting a premium-paying period to pay up your policy faster and accelerate cash value growth.


3. Set up a replacement for your human capital with whole life insurance

Your portfolio growth is highly dependent on future contributions. Whole life insurance is a fail-proof way to arrange for the replacement of your "human capital" if you’re no longer around to provide for your family. Your human capital consists of the wages, benefits, Social Security, and any other unrealized forms of compensation that you would customarily expect to receive in the future.


4. Whole life insurance is a good solution for retirement and for safeguarding your assets

Whole life policies are guaranteed to build cash value over time, and this cash value can help you pay for big-ticket items like a new home or launching a business. Upon retirement, when your life insurance needs decrease, you can use that money to supplement your income during down markets. Instead of selling off portions of your portfolio when prices are depressed, you can use your policy's cash value while the market is down, giving your other assets time to recover.2

Two young brothers playing on the floor

5. Whole life insurance is great for 'reinvesting' your dividends

One of the benefits of purchasing whole life coverage from a mutual company is that you will be eligible to receive dividends,3 if declared. Many policy owners use their dividends to purchase additional coverage (through paid-up additions), which provides more death benefit protection, more cash value accumulation, and more dividend-earning potential. If you prefer, however, you can simply take your dividends in cash or use them to pay future premiums.


Frequently asked questions 

Whole life insurance was created for people who want a lifetime of protection and tax-advantaged benefits. As long as your needs haven’t changed and you can still afford the premiums, there are plenty of good reasons to keep your whole life policy as long as possible:

  1. Guaranteed death benefit: Since the death benefit on a whole life policy is 100% guaranteed, keeping your policy until you die is a nearly foolproof—and, in most cases, tax-free—way to leave money to your loved ones.4
  2. More tax-advantaged growth: Whole life policies come with a built-in accumulation component called cash value. Since the growth is guaranteed, and tax-deferred, the longer you keep your policy, the more your cash value will continue to grow.
  3. Greater dividend potential: While dividends are not guaranteed, they are commonly awarded to eligible whole life policy owners. So, the longer you keep your policy, the more dividends you are likely to collect.

While whole life insurance offers guaranteed growth, it may take a few years before your policy builds significant cash value. Even so, some whole life polices—such as Custom Whole Life or Secure Wealth Plus are able to generate cash value faster than others. If accumulation is a high priority for you, an agent can explain all your options.

Since whole life insurance is not an investment or a savings vehicle, it does not have a stated “return.” It does, however, build cash value that you can use in a variety of ways. Since the cash value accumulates over time, your agent can provide an illustration of the growth you will receive.

If you no longer need, or can no longer afford, your whole life policy, you may be able to sell it to a licensed life settlement company. While this may be a viable solution, there are potential drawbacks and tax implications. As a result, you may want to consider surrendering your policy (giving it back to the company you bought it from) and keeping the cash value, or possibly using your cash value to purchase what is called paid-up insurance. That way, you will still have some coverage but will no longer be required to make premium payments. Be sure to consult your agent and tax professional before taking any action.

Related cONTENT 

Want to learn more about whole life insurance?

A New York Life financial professional can help determine what’s right for you.

New York Life Insurance Company is the issuer of New York Life Whole Life. In Oregon, the Whole Life policy form number is ICC18217-50P (4/18). SMRU # 5013801

1The premium quoted is for a 35-year-old male, rated select-preferred, paying monthly recurring premiums on a Whole Life (AD 117) policy with a $250,000 face amount and no riders. Your premiums may differ. Other rate classes are available. Life insurance applications are subject to underwriting. Premiums are guaranteed for the life of the policy

2Guarantees are based upon the claims paying ability of the issuer.

3Accessing cash value will reduce death benefit and available cash surrender value.

4Guarantees are based upon the claims paying ability of the issuer.