Whole Life Insurance is mostly known for its level face amount that doesn’t decrease in value over time like decreasing term life does. And, it is a combination of providing both a death benefit and a cash value which can be used while you’re still living also known as a ‘living benefit’. The amount of premium you pay will be higher, but level, for the full life of the policy.

Insurers generally offer a guaranteed minimum rate of growth (usually 2 – 4 percent) for the cash value built into your policy. However, the returns on your investment may be lower than in traditional investing because the insurer will invest in a lower paying investment vehicle. The cash value acts like a savings account that grows by a set rate that will not fall below that level. 

 The cash value in a whole life policy grows tax-deferred and therefore makes it’s a good investment.

However, the drawbacks include the higher premium costs to have the living benefit or cash value and the fact that the premiums may extend beyond your income earning years.