Whole life can be effective for building long-term cash and death benefit values, however it lacks some of the accountability and flexibility of newer hybrid products.
Policies stay in force for life provided premiums continue to be paid, either by the policy owner or using the cash values of the policy.
Premiums are set at the beginning of the policy, and must be paid regularly, either by the policy owner, or by using automatic loans against the cash values of the policy or by surrendering the PUA coverage.
Whole life policies are designed to build up cash values. When a premium is missed, the insurer will make automatic premium loans (APL) against the cash values or surrender existing Paid Up Additional (PUA) coverage to cover any missed premium.
While the cash values in a whole life policy result from the insurer investing a portion of the premiums in a smoothed account, whole life policies do not offer investment accounts for the direct investing of the policy owner.
All whole life products include guaranteed cash surrender values. In addition, the policy owner may purchase additional coverage on policy anniversaries that also have GCSVs. The pricing and cash surrender values for this coverage are based on the factors in effect on the date this additional coverage is purchased.
There are no contractual rights to switch from Single to Joint last to Die under a whole life policy.
Whole life policies don't allow for tax free access to your cash values in the case of disability.
Whole life policies do not offer any investment options to the policy owner.
Premiums for whole life are high when compared with other term and permanent policies, but offer significant long-term cash and death benefit values.