How to Buy Whole Life Insurance (2024)

Whole life insurance is a type of life insurance coverage that is designed to last your whole life, unlike term insurance which is scheduled to expire after a certain number of years. The top benefits of whole life insurance include lifetime coverage, cash value, and premiums that won’t increase as you get older. One drawback is that these policies charge a much higher premium (initially) compared to shorter-term options.

It’s crucial to compare whole life quotes and understand the buying experience to get the best policy for your needs, especially since the insurer you work with can make a big difference in how much you pay. Here’s a complete look at the process for how to buy whole life insurance as well as quotes from some of the most popular carriers.

How to Buy Whole Life Insurance

1. Determine How Much Life Insurance You Need

Before researching quotes, consider how much life insurance you need. One quick rule of thumb is to buy at least six to 10 years of your salary. Another approach is to multiply how many years you have left until retirement by your salary. For example, someone who expects to work 20 more years earning $40,000 would need $800,000 in life insurance according to this rule.

There are other calculations that look more closely at your specific financial situation. For example, the DIME approach says your life insurance should be enough to pay off all your debts, replace your income until your children turn 18, and provide for their college education. By looking at the specifics of your financial plan, you can finetune how much you buy so you don’t have too little or too much.

2. Get Quotes

Collecting quotes is one of the most important parts of the life insurance buying process and should consist of the following steps.

Select the Companies

There are several hundred life insurance companies to choose from in the United States. You may already have some options in mind based on your existing insurance policies, relationships with local agents, and/or referrals from friends. Other factors to consider as you compare companies are:

• AM Best financial strength rating: indicates a company’s ability to pay its insurance claims.
• J.D. Power customer satisfaction ranking: J.D. Power annually surveys consumers on their experience with major life insurers
• NAIC consumer complaint index: Every year, the National Association of Insurance Commissioners (NAIC) calculates a complaint index for every insurer that indicates whether it received fewer complaints than expected, more than expected, or an expected amount.

Prepare Information and Get Quotes

For whole life insurance policies, you’ll generally need to contact an agent directly to get a quote. (This is unlike term life insurance quotes, which are readily available online.) Each company has different requirements to put together a quote. Expect to submit:

• Your age.
• Your zip code.
• Your height and weight.
• Whether you’ve used tobacco.
• Some information on your medical history, like whether you have high blood pressure or high cholesterol.
• Some information on your family history, like whether there is a history of cancer.
• The amount of coverage you want for the death benefit.

Request Illustrations

Life insurance illustrations provide much more information about the policy than a quote, including features, limitations, riders, and performance over time. Whole life insurance policies accumulate a cash value, which supports the death benefit and helps keep premiums level over time. But the cash value is also something you can borrow or withdraw from.

An illustration will estimate your cash value and death benefit at different policy years using both guaranteed and non-guaranteed future returns. It also indicates surrender charges and how long they apply (should you cancel or withdraw from the policy during the surrender period).

3. Compare Quotes/Illustrations

When comparing whole life insurance policies via quotes and illustrations, make sure to consider more than how much they cost. While cost is an important factor, other factors to compare are:

• Cash value accumulation: Whether the policy has cash value and if so, how quickly it grows.
• Dividends: Whether a company pays part of its profits to policyholders as a dividend, which increases how quickly the cash value grows.
• Surrender period: Whether there’s a surrender period. If so, the policy would charge a penalty if you cancel to get your money back within the first few years of your purchase.
• Living benefits: Whether there are other useful features, like accelerated death benefits which pay the death benefit while you’re alive if you experience a terminal, chronic, or critical illness (depending on the type of living benefits included or purchased).

4. Add Riders (optional)

Riders are a type of optional benefit you could add to your whole life insurance policy, for an additional charge. Some common ones include:

• Disability waiver of premium: If you become disabled, the policy stops charging you the premium.
• Accidental death: If you pass away in an accident, the policy pays your heirs a larger payout, usually twice as much as the listed death benefit.
• Child term rider: This rider gives your minor children life insurance coverage as part of your policy.
• Guaranteed insurability: Policies with this rider allow you to increase the death benefit in later years while still qualifying for the same rate and health class you do when you apply.

5. Complete the Application

To complete the whole life insurance buying process, you typically need to go through medical underwriting. The insurer often pulls your medical records, requests a thorough health and family history, and may ask you to submit blood and urine for testing, and/or have you meet with a nurse for a thorough physical. Someone who is healthier is much more likely to qualify for life insurance at a lower premium.

Insurers have begun using accelerated underwriting processes (no-medical-exam life insurance) allowing those in excellent health to skip the medical exam. Your health information is collected from other sources so you don’t need to undergo an exam.

6. Purchase

Once underwriting is complete, the insurer will let you know whether they’re willing to extend coverage and at what rate.

Most companies allow you to pay your premium when you first submit the application, providing conditional coverage while the insurer reviews your records. If you die during this period, your heirs receive the death benefit. That way you don’t have to go uncovered while waiting on the application process.

7. Free-Look Period

After you sign up, insurance companies are required to give you a free-look period. This is a period of up to 30 days, depending on where you live. During this time, you can thoroughly review your life insurance contract. If you change your mind at any point during the free look period, you can request a full refund of your premium, no questions asked.

Whole Life Insurance Cost

What you’ll pay for whole life insurance depends on many factors, including your location, age, health, gender, occupation, policy features, and the company you choose.

But to give you an idea, here is a sampling of whole life insurance quotes across five major life insurance companies. Quotes were collected for 30-, 40-, and 50-year-old males in excellent health living in the 19808 zip code (Wilmington, DE). As you can see, there is considerable variation, which is why it’s important to get whole life insurance quotes from multiple providers.

Quote for a 30-Year-Old