Whole Life Insurance with Cash Value
Over 100 Carriers to Quote From. Here are a few of them!
Whole life insurance with cash value provides permanent protection, guaranteed level premiums, and a built-in savings component that grows every year. It’s ideal for families who want lifetime coverage that they fully understand plus liquid, tax-advantaged value they can access for opportunities or emergencies—without market volatility.
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How Whole Life with Cash Value Works
- Permanent protection: Coverage lasts for life as long as premiums are paid (or once the policy is paid-up), making it a core tool for long-term wealth and legacy strategies .
- Guaranteed elements: Level premiums, guaranteed death benefit, and guaranteed cash value accumulation are built in, so you’re not guessing what the policy will look like years from now.
- Dividends (if declared): Participating carriers may pay dividends you can take in cash, use to reduce premiums, or apply to paid-up additions (PUAs) to accelerate growth. Dividends are not guaranteed.
- Liquidity: You can access cash value via policy loans or withdrawals, which can help with opportunities, emergencies, or even supplementing retirement income. Just remember that any access reduces values/benefits and may have tax implications.
- Tax advantages: Cash value grows tax-deferred; the death benefit is generally income-tax-free to beneficiaries, which can be powerful for higher-income families doing advanced life insurance planning .
Who It’s Best For
- Families who want lifetime coverage with predictable, level costs and a clear understanding of how much life insurance may cost over time .
- Savers seeking guaranteed accumulation and potential dividends who appreciate a slow-and-steady, long-term approach to building value.
- Business owners building a liquid reserve without market swings, sometimes paired with exam-based underwriting for larger policies.
- Estate planners needing tax-efficient legacy and liquidity for estate taxes, buy-sell agreements, or special needs planning.
Popular Riders & Customization
- Paid-up additions (PUA): Boosts cash value and death benefit faster by purchasing mini paid-up policies inside the contract.
- Term blend rider: Adds low-cost term coverage now while building whole life over time, helping you reach a larger death benefit at a manageable premium and offering flexibility if you later decide to convert term life to permanent coverage .
- Waiver of premium: Keeps your policy in force if you meet the policy’s disability criteria, protecting both coverage and long-term cash value.
- Chronic/terminal illness benefits: Lets you access a portion of the death benefit while living under qualifying conditions, helping with care or income gaps.
- Children’s term rider: Provides affordable child coverage today with the option to convert to permanent insurance later without new health evidence.
Illustrative Case Example
Profile: A 40-year-old professional allocates $5,500 per year to a participating whole life policy.
- Years 1–5: Guaranteed cash value builds; any dividends are used for PUAs to compound long-term growth.
- Year 10: The policy owner uses a modest policy loan to help fund a business opportunity, keeping the coverage in force.
- Long-term: By retirement, accumulated values can support tax-advantaged income via policy loans while still maintaining a death benefit for heirs.
Loans and withdrawals reduce cash value and death benefit and may cause a taxable event if the policy lapses or is surrendered. Dividend scales can change over time. We provide side-by-side carrier illustrations before you decide.
Whole Life vs. Other Options
Term life offers the lowest initial cost for temporary needs such as income replacement and mortgage protection, but it does not build any cash value. Universal life variants provide flexible premiums and different crediting methods, which can be attractive for higher-income families with complex planning needs. If you’re comparing structures, a good starting point is understanding the basics of buying coverage in How to Get Life Insurance .
Whole life insurance with cash value is most appealing when you want guarantees, simplicity, and a long-term, steady accumulation engine that can complement other strategies like advanced life insurance strategies used by affluent families .
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FAQs: Whole Life Insurance with Cash Value
What is whole life insurance with cash value?
Whole life insurance is a permanent life policy that covers you for your entire life as long as required premiums are paid. Part of each premium goes into a cash value account that grows over time and can be accessed while you are alive.
How does the cash value grow?
Cash value typically grows through a combination of guaranteed interest and, for participating policies, possible dividends. The exact growth pattern depends on the carrier, product design, and how you choose to use any dividends. All growth is tax-deferred while it stays inside the policy.
What can I do with the cash value while I’m alive?
You can generally borrow against the cash value, make partial withdrawals, or in some designs use it to help pay premiums. Any loans or withdrawals will reduce the policy’s cash value and death benefit and may create tax consequences if the policy lapses or is surrendered.
When does the policy build enough cash value to use?
Whole life is designed as a long-term strategy. In most cases it takes several years—often 7 to 10 years or more—for cash value to reach levels that feel meaningful for loans or withdrawals. Early premiums primarily cover insurance costs and policy expenses.
How is whole life different from term life insurance?
Term life provides coverage for a set period of time and has no cash value; it is typically the lowest-cost way to get a large death benefit for temporary needs. Whole life provides lifetime coverage, builds cash value, and has much higher premiums but offers guarantees and potential long-term accumulation.
Do whole life policies always pay dividends?
No. Only participating whole life policies are eligible to receive dividends, and even then, dividends are not guaranteed. Non-participating policies do not pay dividends and rely solely on guaranteed values.
Are there tax benefits to whole life insurance?
Yes. In general, the death benefit is paid income-tax-free to beneficiaries, and cash value grows tax-deferred. Policy loans may also be accessed on a tax-advantaged basis when structured properly. However, withdrawals or lapses with outstanding loans can create taxable income, so it’s important to manage the policy carefully.
What are the main drawbacks or trade-offs?
The primary trade-offs are higher premiums compared to term life, slower cash value growth in the early years, potential surrender charges, and product complexity. Whole life is best suited to long-term planners who can comfortably commit to the premiums over time.
What happens if I stop paying premiums?
If you stop paying premiums and do not make other arrangements, the policy may lapse and coverage will end. Many whole life policies offer nonforfeiture options—such as reduced paid-up insurance or extended term coverage—using existing cash value so you can keep some level of protection without new payments.
How do I know if whole life with cash value is right for me?
Whole life may be a fit if you want permanent coverage, like the idea of guaranteed cash value, and have long-term goals such as legacy planning or building an accessible, tax-advantaged reserve. Comparing side-by-side quotes for term, universal life, and whole life can help clarify whether the extra cost aligns with your priorities.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
