Whole Life Insurance

Build a financial foundation to help you support the people who depend on you.

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Whole life insurance can help you provide financial support for yourself and your loved ones. With guaranteed level premiums and guaranteed accumulation of cash value as long as those premiums are paid on time, it may offer you and your family a source of financial support to pay for future expenses — from college tuition to retirement income.

What is whole life insurance?

Whole life insurance is a type of permanent life insurance that can help you provide financial support for your beneficiaries after you die. It is designed to last your lifetimei, which means that, as long as you pay your premiums, your beneficiaries will receive a payment based on the amount of your coverage. Whole life is typically considered the most conservative life insurance because it has the most guarantees from the insurance company — a guaranteed level premium, guaranteed death benefit2 and guaranteed cash value accumulation.

Key features of a whole life insurance policy

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Your premium never goes up.

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Your death benefit goes to the person or people you name as beneficiaries. It’s generally income-tax free.3

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Your policy builds a cash value that grows at a guaranteed rate as long as premiums are paid on time.

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If you need money during your lifetime, you can use the available cash value.4

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If you cancel, you get back the available cash value.

How does whole life insurance work?

A whole life insurance policy has a set premium that’s guaranteed never to increase, based on the amount of coverage you want as well as factors like your age and health and risk factors like smoking. Whole life policies can accumulate cash value, too. When you die, your beneficiaries receive a payment (called a death benefit) in the amount of coverage you choose minus the policy’s loan balance (if any). More information about how life insurance works is available here. 

How much whole life insurance do I need?

To make a rough calculation of how much coverage you might need, consider the answers to a few questions about your dependents’ financial future:

number one iconDo they rely on your income? For how many years will that be true?

number two iconDoes anyone depend on you for long-term care? How many years will they need it?

number three iconDo you have kids heading off to college? What would that cost?

number four iconIs there a mortgage or other substantial debt that needs paying off?

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Because whole life insurance costs more than term insurance, you might consider buying a term life policy for short-term needs and only buy a whole life policy for long-term needs.

How much does whole life insurance cost?

The cost of a whole life insurance policy will depend on factors that include: 

  • The amount you want your beneficiaries to receive
  • Your age when you apply
  • Your health
  • Whether you smoke or have other risk factors

What types of whole life insurance does Farmers offer?

Farmers EssentialLife® Simple Whole Life5 is our most popular whole life product. Among its key features: 

  • The policy uses a simplified, electronic application process. A medical exam may not be required. Issuance of a policy may depend on answers to questions in the application.
  • Coverage is issued between the ages of 15 days and 80 years — with proceeds paid to age 121.
  • Depending on your age, policies with a face amount as small as $15,000 or as large as $250,000 may be available.6, 7

What are some differences between term and whole life insurance?

Term life insurance provides coverage for a specific amount of time and does not accumulate cash value, unlike whole life insurance, which provides lifetime coverage and can accumulate cash value.

Term life insurance

Whole life insurance

Provides coverage at a fixed cost for a specific timeframe — generally 10, 20 or 30 years, then
cost increases with age.

Provides lifetime coverage.

Premiums remain level for the initial level premium period. The shorter the level premium period, the less expensive coverage can be. Premiums increase after the level premium period.

Whole life guarantees level premiums for the life of the policy.

Provides a death benefit but does not accumulate cash value.

Accumulates cash value over time as long as premiums are paid, and assets may be used4 during your lifetime.

May be converted into a permanent policy.

Cannot be converted into another type of life insurance policy.

What are some differences between universal life insurance and whole life?

Both are permanent life insurance, meaning they are designed to last your whole lifetime, as long as premiums are maintained. But universal life and whole life policies differ in key ways.

Whole life insurance

Universal life insurance

Permanent — provides lifetime coverage.

Permanent — provides lifetime8 coverage.

Premiums are guaranteed level and won’t increase for the life of the policy.

Premiums are flexible. You can choose each month to pay the minimum or pay more. Payment above the cost of insurance builds as cash value.

Death benefit is guaranteed for the life of your policy. You choose your coverage amount when you buy your policy. You can surrender part of your policy if you no longer need all of it, as long as the remaining policy meets minimum requirements.

Death benefit is flexible. You can increase it, with underwriting approval, or reduce it, within policy limits. You can also choose whether the death benefit is a fixed amount or increases by the amount of your cash value.

Cash value builds at a guaranteed rate with each month's premium. Can be used during your lifetime. If you outlive your policy at age 121, you receive the cash value, minus any outstanding loans.

Cash value builds with payments above the cost of insurance and earns interest. Can be used to cover increasing cost of insurance with age. Can be used during your lifetime. You can choose whether the death benefit paid to your loved ones is level or includes the cash value.

What if my health makes it hard to qualify for whole life insurance?

If your health makes it difficult for you to qualify for other life insurance coverage, Farmers® Graded Benefit Whole Life9 has a simplified underwriting process that may help you qualify. Among its features:

check iconCoverage from $5,000 to $30,0006,7, with a guarantee to accumulate cash value.

check iconA guaranteed death benefit, with a limited payout if the policyholder dies within the first two policy years.

check iconGuaranteed level premiums while the policy remains in force.

check iconCoverage is guaranteed for your lifetime — or the life of the policy — provided premiums are paid per the terms of the contract.

check iconNo medical exam — just three simple health questions determine eligibility.

These features can make Farmers Graded Death Benefit Whole Life popular for people in less than perfect health who are interested in keeping their end-of-life expenses from being a burden on their loved ones. Unlike a traditional “final expenses” or “burial” policy, this policy is not tied to specific funeral expenses. There’s no guarantee this policy will cover the entire cost of your funeral. Instead, the death benefit you select is paid to your beneficiaries, for them to use as they choose. They could use the proceeds to help pay for your funeral costs, but if some other financial difficulty is a higher priority, they can direct the money there.

Learn From Experience

Expand your knowledge base with articles relevant to you.

What Should I Know Before Buying Life Insurance?

Life insurance can be a tricky topic. It’s designed to provide financial support for those who depend on you, but permanent life insurance can also be used to access money for big purchases during your lifetime through policy loans.

Which Is Better, Term or Whole Life Insurance?

Policy types are different because they’re designed to do different things. So the real question isn’t which one is a better tool, but which tool fits your situation better.

What Are Other Benefits on a Life Insurance Policy?

Both term and permanent life insurance offer “riders” that could potentially provide payments while you’re alive.

1 Lifetime coverage (or life of the policy) is guaranteed provided premiums are paid per the terms of the contract.

2 The death benefit is guaranteed according to the terms of the contract and provided that premiums are paid.

3 Farmers® companies, employees, agents, and representatives do not provide legal or tax advice. In general, partial or full surrenders from a permanent life insurance policy in excess of the policy’s basis are taxable. Limited circumstances exist where death proceeds will be taxable. This material has been prepared for general informational purposes only, and is not intended to provide and should not be relied on for tax, legal or financial advice. Because each individual’s situation is different, specific advice should be tailored to your particular circumstances; you should always consult your own tax, legal and other advisors before engaging in any transaction. This material reflects our general understanding of current law as of the date hereof, but tax laws and IRS administrative positions may change. This material is not intended to and cannot be used to avoid any Internal Revenue Service penalties. We specifically disclaim any liability resulting from the use or application of information contained in this publication. Farmers New World Life Insurance Company is not affiliated with or endorsed by any government agency.

4 Cash values may be accessible through policy loans. Policy loans that are not repaid and partial surrenders will reduce cash surrender value and death benefit. Policy loans are subject to interest charges. If your policy is a modified endowment contract, loans and surrenders may incur taxes and penalties.

5 Policy form ICC18-FESWL or applicable state variation

6 Available face amounts may vary.

7 Benefit amounts provided will depend on the product selected and the premium will vary with the amount of benefits.

8 Lifetime coverage (or life of the policy) is guaranteed as long as all premiums are paid to keep the policy in force.

9 Farmers Graded Death Benefit Whole Life Insurance policy, policy form ICC17-FGDB or applicable state variation. During the first two years of the policy, the death benefit is limited to 110% of the premiums due and paid, unless the insured’s death is due to Accidental Bodily Injury as defined in the contract. If the insured dies due to Accidental Bodily Injury within the first two policy years, the full death benefit will be paid. Death due to Accidental Bodily Injury must occur as a direct result of an accident that happened while the policy is in force, and occur independently of illness and other causes (except illness due to an accident). Also refer to the contract for detail on the exclusions related to accidental death.

10 This life insurance does not specifically cover funeral goods or services, and may not cover the entire cost of your funeral at the time of your death. The beneficiary may use the proceeds for any purpose unless otherwise directed.


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