What Is Whole Life Insurance For? 
First of all , whole life insurance is for what all forms of life insurance are for , to pay a cash benefit to the policy 's beneficiaries upon the death of the policyholder . Without getting into the whole term life insurance versus permanent life insurance debate , whole life insurance policies are generally designed to build up what is called `` cash value '' over the years that the policy is in effect . This cash value may accrue in addition to the face value -LRB- death benefit amount -RRB- of the life insurance policy . For example , a $ 100,000 face value whole life policy that has accumulated $ 10,000 in cash value at the time of the policyholder 's death would pay out $ 110,000 . In some cases this cash value can also be accessed by the policyholder or taken out as a loan to be paid back if the policyholder has a need to access this asset . Another aspect of a whole life policy is that you can fully pay for a whole life policy and have it in effect for the rest of your life with no further premiums required . This may be accomplished with a one time lump sum payment of premium or payment over a specified period of years . This assures the policyholder that they have life insurance protection in their later years when their ability to pay monthly insurance premiums may be severely reduced or even eliminated . This is in contrast to term life insurance which covers the policyholder for the specified term -LRB- time period -RRB- of the policy -LRB- usually 10 , 20 or 30 years -RRB- and then ceases to be in effect , has built up no cash value and leaves the policyholder uninsured unless they have made other arrangements . Term life insurance does have the advantage of being less expensive than whole life insurance and other forms of permanent life insurance . Personally , I believe that people should have a mix of term and permanent life insurance protection in place during the course of their lives but this is a discussion you should have with your financial advisor and insurance agent to determine the best strategy for your needs . 