Whole Life Policies (or “Permanent Policies”) involve the payment of a premium in exchange for death benefit coverage just like Term Policies. However, the premiums for these policies are higher because they accrue equity or “Cash Value”. For example, with a Whole Life policy you might pay $200 each month in exchange for a policy with $100,000 of death benefit, which would only cost you $100 per month with a Term Policy. The difference is that with a Whole Life policy, each month you “save” or “accrue” part of your payment as cash value, which then earns interest (usually in a tax sheltered environment).

• If you ever cancel your policy (also called “surrendering your policy” or letting it “lapse”), you can get this cash value back from the insurance provider. For more information on letting your policy lapse, click here!
• In most cases, the policy owner can also take loans against the cash value at reasonable interest rates and use them to pay premiums, to purchase other insurance, or for other purposes. For more information on borrowing against your policy’s cash value, click here!
• As long as the premiums are paid, Whole Life policies usually remain in effect until age 100. If you live to 100, the policy’s face value is paid, even though you are still alive.
  
  Some more complex forms of Whole Life policies are “Universal Life” and “Variable Life” policies.