Whole Life Insurance Pros and Cons (Is it a Good Investment?)

Written by Kim Wilhelm

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Last Updated 21 May 2024

Whole life insurance is the preferred type of life insurance for seniors. Like any type of insurance, whole life insurance has advantages and disadvantages. Learn about the benefits and drawbacks of whole life insurance and why we think whole life insurance is worth it for seniors.

Whole Life Insurance Pros

Permanent Coverage

The main reason we think whole life insurance works best for seniors is because it offers permanent coverage. Compared to term life insurance, whole life insurance lasts until you die, whereas term life insurance only lasts for a certain number of years.

So, if you were to buy a 20-year term life insurance policy and outlive it, then you spent all that money for 20 years with nothing to show for it. With whole life insurance, you don’t have to worry about that, because you’re covered until death.

Fixed Rates

Another benefit to whole life insurance is fixed rates. The price you pay in the first month of a whole life insurance policy is the same price you’ll pay for the rest of your life, regardless of future health issues. Locking in the same predictable premium is a great way for seniors to ensure their life insurance costs fit into their budget.

Don’t be swayed by companies that offer $1 for the first month for whole life insurance. These companies usually have higher rates after they lock you in with that cheap first month rate. 

Other companies, like Colonial Penn, are even worse. They make you pay a high price per unit, thinking you’re getting a great deal, but then raise your price and lower your coverage over time.

At Final Expense Direct, we only work with companies that offer fixed rates for life. Call us today to find the right company that will give you the best whole life insurance rates.

Predictable Coverage

Whole life insurance for seniors also comes with a level death benefit, which means the amount of life insurance you buy will be the same amount your beneficiary gets when the Good Lord calls you home.

But, if you are in poor health when you apply, you might get a graded or modified death benefit. That means if you die in the first two years of the policy, your beneficiary might only get a portion of the death benefit instead of the full death benefit.

Though some might think that shows whole life insurance isn’t good, we think the opposite. If life insurance companies didn’t offer a graded or modified death benefit to unhealthy seniors, the alternative is being denied and having no coverage at all.

Many seniors buy whole life insurance to pay for their funeral and final expenses. This is so common that whole life insurance is usually called final expense insurance, funeral insurance, or burial insurance.

Whatever you want to call it, whole life insurance for seniors is good for healthy seniors, as well as those in poor health. Healthy seniors can get lower rates with an immediate death benefit, while unhealthy seniors might pay more and get a modified death benefit, but still have coverage. And, if you live past the two-year mark, your beneficiary will get the full death benefit.

No Medical Exam

Perhaps the best advantage of final expense life insurance for seniors is no medical exam. Whether you’re 50 or 85, or even older, you don’t have to take a medical exam to get final expense whole life insurance.

If you’re in good health or only have one or two minor pre-existing conditions, you can answer a few health questions on the application to get a cheaper rate. 

But if you’re in poor health or have several health issues, you can get a guaranteed issue final expense insurance policy, which has no health questions. You just apply and you’re approved for coverage.

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Whole Life Insurance Cons

Higher Cost

When comparing term vs whole life insurance costs, you’re always going to pay more for the same amount of coverage with whole life insurance. That’s because it lasts forever and term life insurance doesn’t. 

There’s no chance the life insurance company won’t have to pay the death benefit when you buy whole life insurance, but there is a chance that they won’t if you buy term life insurance. 

With more risk to the company, comes higher payments to the customer. But then you get the added peace of mind of the guaranteed death benefit when you head off to meet the Good Lord.

Smaller Death Benefit

Another drawback to whole life insurance for seniors is a smaller death benefit amount. While you can buy millions of dollars in term life insurance, you can usually only buy up to $40,000 in final expense insurance for seniors. 

Some companies, like The Baltimore Life Companies, offer up to $150,000 in final expense insurance, which is a great option if you need more than $40,000 in coverage.

Poor Investment Strategy

Most seniors looking for final expense insurance aren’t buying it for its investment potential, but to help their loved ones pay for their funeral and other expenses. As a whole life insurance policy, final expense insurance comes with a cash value component, which acts like a savings account.

Though you can earn a modest amount of interest on the cash value that will grow over time, it's a poor investment strategy, so probably won’t make a big difference to your retirement income.

But the death benefit could be a great supplemental resource for your spouse or loved ones when you pass away and they no longer have your income to depend on.
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Where Can I Buy Whole Life Insurance for Seniors?

Now that you’ve weighed the pros and cons of whole life insurance for seniors, where can you buy it? Not all companies are created equal, and they all have different rates depending on your:

  • Age
  • Health status
  • Coverage needs
  • Gender

Why spend hours getting quotes from different companies to compare rates, coverages, and policy details to find the right one for you when you don’t have to?

Final Expense Direct offers a better solution. We’re an independent broker agency working with a long list of top-rated final expense life insurance companies

All you have to do is request a quote online or call us. Our agents will ask you a few questions about your health and coverage needs, then help you find a final expense plan that makes sense for your needs and budget. Most seniors hang up the phone with a policy in hand.

We make it easy so you can end the day with peace of mind knowing that you’re covered and should the Good Lord call you home, your loved ones won’t feel the financial burden of paying for your funeral or end-of-life expenses.


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