What Is Whole Life Insurance?
Whole Life Insurance is exactly what it sounds like — coverage for your whole life. This means when you buy whole life insurance, you’re guaranteed permanent life insurance coverage and your beneficiaries will receive a death benefit regardless of when you pass away.
This differs from other types of life insurance — like term life insurance — which only offer coverage for a specific period of time, and will not pay your beneficiaries if the policy expires before you pass away.
How Does Whole Life Insurance Work?
Whole life insurance can help financially protect your family if you were to pass away. It’s a lifelong policy with level premiums and offers living benefits, like cash value. Here’s a high-level look at some of the ways that buying a whole life insurance policy can benefit you and your loved ones:
Long-term insurance protection
Buying a whole life insurance policy means you are purchasing lifelong coverage. This means when you pass away, your beneficiaries will receive a death benefit that they can use for things like your final expenses, paying off debts or leaving a legacy for loved ones.
Accumulates cash value
Permanent coverage builds cash value that you can borrow against. For instance, you might choose to borrow against your cash value to help with things like a down payment on a house or paying for college tuition.
Keep in mind, any loans and unpaid interest outstanding at time of death will be deducted from the death benefit at the time of claim or from the cash value if the policy is surrendered, and the policy could terminate if the loan balance grows too large for the cash value to support it.
Your premiums won’t increase regardless of age or health changes. That means no surprises and no increased financial burden with life changes.
Potential to pay dividends
Dividends are not guaranteed. But if your policy is eligible for dividends, when paid, you can use them to purchase additional coverage or reduce premiums. They can also be paid to you in cash or you can elect to have them accumulate with interest.
Term Life Insurance vs. Whole Life Insurance
Though both types of policies help financially protect your family, you may want to consider the benefits of having coverage that lasts a lifetime, compared to temporary coverage that exists only for a specific amount of time. You can also couple the two types of policies together to even further customize coverage to fit your needs.
Term life insurance is temporary coverage that lasts for the term of your policy, usually in 10-, 15-, 20- or 30-year terms, which is great to have if you have larger temporary financial obligations, like a mortgage, or people who might depend on you financially for a limited period of time, like children. But your beneficiaries will only receive the death benefit if you pass away while the policy is in force.
Whole life insurance, in contrast, is permanent coverage that lasts for your entire life, guaranteeing a death benefit, and has living benefits like cash value that you can borrow against.*
Compare your life insurance options to see what’s best for you.
What Types of Whole Life Insurance Does American Family Life Insurance Company Offer?
At American Family Life Insurance Company, we understand that every person and family is unique — that’s why we offer four Whole Life Insurance options you can choose from to meet your specific needs. In addition to DreamSecure Children’s Whole Life Insurance and DreamSecure Senior Whole Life Insurance, we offer:
DreamSecure 15 Pay Whole Life Insurance
DreamSecure 15 Pay Whole Life Insurance provides life insurance that is fully paid after 15 years with coverage that lasts a lifetime.
DreamSecure Whole Life Insurance
Provide a foundation for your loved ones’ financial future — DreamSecure Whole Life Insurance is permanent and designed with affordability in mind, so you can provide a legacy. The DreamSecure Whole Life Insurance policy has guaranteed level premiums that are stretched out until age 100 and is available for both adults and children.
Common Questions About Whole Life Insurance
Have questions about DreamSecure Whole Life Insurance? We’ve got answers for some of the most common questions about whole life insurance.
How much life insurance coverage do I need?
The amount of life insurance coverage and the type of coverage you need is unique to you and your family. This equation can help get you started though:
Current/Future Needs (debts, child education/daycare, income replacement) – Resources (significant other’s income, investments, your existing life insurance) = Your Life Insurance Needs.
With this equation in mind, you can also use our free Life Insurance Calculator to see how much life insurance coverage you may need and to get an instant cost estimate. For more assistance, check in with your agent. They’re the best resource to help you determine how much life insurance coverage is right for you.
How much does whole life insurance cost?
The cost of whole life insurance is often overestimated, and it may be less expensive than you think. The following are some factors that play a big role in determining your whole life insurance premium:
- Your age
- Your gender
- Your health
- Coverage amount
Typically, the younger and healthier you are, the lower your whole life insurance rate will be. To learn more, talk to your agent about what the cost of whole life insurance would be for you. You can also get a quick estimate by using our Life Insurance Calculator.
Can I convert my term life policy to whole life?
Some policies have the option to convert term life insurance coverage to whole life coverage. A convertible insurance policy, like American Family Life Insurance Company’s DreamSecure Term Life Insurance, allows you to convert a portion or all of your existing term life insurance policy during the conversion eligibility period.
You can do this without having to take a medical exam or go through other screening that could affect your eligibility. This conversion option delivers the benefit of starting with a less expensive term life insurance policy (compared to a whole life policy, for example), while still being able to convert to a long-term policy later if your insurance needs and financial means change.
Looking for even more flexibility? Learn about DreamSecure Flexible Life Insurance, which offers long-term protection while giving you the ability to change your policy as your life changes.
Additional Life Insurance Coverages
American Family Life Insurance Company offers a number of additional coverages that you can purchase to build a whole life insurance policy that suits your needs. Here are some of the additional coverages available:
Guaranteed purchase option
Allows the purchase of additional permanent life insurance without medical questions or an exam at specified dates and life events.**
Children’s insurance rider
Provides $15,000 of coverage on natural, adopted and stepchildren.
Waiver of premium benefit rider
Waives premiums if the insured becomes totally disabled.
In addition to the coverages available for purchase mentioned above, each policy automatically comes with an Accelerated Death Benefit option (to be added at time of need). This benefit allows the policy owner to collect a part of the death benefit under certain conditions if the primary insured is diagnosed with a terminal illness.
Exercising the Accelerated Death Benefit option may have tax consequences and could impact qualification for government benefits.
Request a Whole Life Insurance Quote From an American Family Insurance Agent
Are you ready to take the next step in helping to plan for your family’s financial future and buy whole life insurance? Contact an American Family Insurance agent to learn more about customized life insurance coverage that helps you protect what matters most.
This is a brief description of coverage and is subject to policy and/or rider terms and conditions which may vary by state. Fixed and guaranteed premiums are statements about the policy as determined at issue, and any changes made to a policy may affect the premium and are subject to our underwriting rules. The words lifetime, lifelong and permanent are subject to policy terms and conditions. This policy matures at age 121. Please check with an American Family agent for details on coverages and restrictions.
* Any loans taken from your life insurance policy will accrue interest. Any outstanding loan balance (loan plus interest) will be deducted from the death benefit at the time of claim or from the cash value at the time of surrender. If the loan balance grows too large for the cash value to support it, the policy could terminate.
** The Guaranteed Purchase Option may be exercised only at specified dates and life events and is subject to benefit amount limitations. See rider for additional details.
Policy Forms: ICC18-33 (10), ICC18-33 (15), ICC18-34 (20), ICC18-35 (30), L-33 (10)(ND), L-33 (15)(ND), L-34 (20)(ND), L-35 (30)(ND), L-33 (10)(SD), L-33 (15)(SD), L-34 (20)(SD), L-35 (30)(SD), ICC18-36 (10), ICC18-36 (15), ICC18-36 (20), ICC18-36 (30), L-36 (10)(ND), L-36 (15)(ND), L-36 (20)(ND), L-36 (30)(ND), L-36 (10)(SD), L-36 (15)(SD), L-36 (20)(SD), L-36 (30)(SD), ICC17-225 WL, L-225 (ND) WL, L-225 WL, ICC17-227 WL, L-227 (ND) WL, L-227 WL,), ICC21 L141 MS 01 22, L141 ND 02 22, L141 SD 02 22
Rider Forms: ICC17- GPO WL, L-GPO WL ICC22 L328 MS 01 22, L328 MS 01 22, ICC17-WP WL, L-WP WL, L-WP (SD) WL, ICC17-ACDB WL, L-ACDB WL