Whole Life Insurance

Whole life insurance is predictable because the premiums, rate of cash value growth and amount of the death benefit are fixed and guaranteed.

Best for young families:

If you want to provide for your family while also investing in your future, a whole life insurance policy could be a good option to consider.

As we’ve noted, whole life insurance has its pros and cons. It’s typically more expensive than term life insurance, because, in addition to the death benefit, your policy accumulates cash value over time, which you can borrow against. That may be a helpful benefit as your family grows.

And like the name implies, whole life insurance stays with you for your whole life, or at least as long as you continue making on-time payments and adhere to the policy’s terms and conditions. So once your policy is set, you’ll have coverage while your family is young and you can rely on your policy to carry you through your later years.

Best for investing in your child’s future:

If you’re a new parent, you may want to consider taking out a child insurance policy that your kid could tap into later down the line. And though this is a form of whole life insurance that covers children should they die, the main reason we’re looking at it is for the benefits your child could see later in life, when they’re ready to pay for college or buy their first home.

With the cost of college on the rise, your child may appreciate having the ability to borrow money against the cash value of a life insurance policy to help pay for their education. Your child could also tap into the insurance policy to help make up a down payment for a first home or to pay for a financial emergency.

Hopefully, you’ll never need to tap into the death benefit. We understand that no amount of money will ever make up for the loss of a child. But a life insurance policy for a child could be an investment in your child’s future, while providing you with the knowledge that if tragedy strikes, the coverage can help.

Best for older adults:

Guaranteed issue life insurance

If your kids have long since left the house, you might not feel the need to pay for an expensive life insurance policy. But it may still be worth considering taking out a small policy to help your family pay for your funeral expenses.

If you’re concerned that old age or bad health might lead to your being denied coverage, you could look for what’s known as a “guaranteed issue” life insurance policy, which doesn’t require a medical exam. One potential downside? You might be charged higher premiums.

Like the name implies, you won’t be turned away from a guaranteed issue life insurance policy because of your age or poor health. Unfortunately, these policies tend to have more-expensive premiums, making them a last resort for many people.

How we picked the best types of life insurance for each life stage

We started by considering the different needs people might have at various stages of life.

If you’re a single adult, you might have less need for a top-of-the-line life insurance policy with high premiums and high payouts. Conversely, if you have young children, you might want a policy that keeps the door open to investing in their future.

We can’t possibly consider all the factors that may go into your decision, but we tried to consider life insurance policies that generally meet the needs of people at these major life stages.

Other types of life insurance to consider

While term life insurance and whole life insurance are some of the more common types of life insurance you’ll come across, they aren’t the only options out there.

As we noted earlier, whole life insurance is one type of cash value insurance, which combines a death benefit with the ability to accumulate cash over time. Here are some other types of cash value insurance you may want to consider.

Variable life insurance — This type of life insurance has a death benefit that’s tied to the performance of certain investment assets. The value of the death benefit varies depending on the performance of those assets, which could mean a higher or lower payout depending on interest, timing, investment performance and other factors.
Universal life insurance — If flexibility is what you’re after, a universal life insurance policy could make sense. This type of policy may allow you to vary the amount of your premium payments or even skip certain payments. The death benefit is also adjustable, and you’ll accumulate cash value from a combination of premium payments and interest.
Variable universal life insurance — As its name implies, this is a combination of the above types. It’s “variable” in the sense that its value is also tied to certain investments, and “universal” in the sense that it allows for some extra flexibility.