How Does Whole Life Life Insurance Work? 
Very simply put , Whole Life Insurance has a death portion and a life portion . The death portion will pay the face amount of the policy to the beneficiary when the insured person dies . The life portion accumulates cash value for the insured person to use while they are still alive , if desired . They can take the cash as a loan and repay it back to their policy with interest , so that the death benefit stays intact . Or they can surrender the policy and collect the cash value at some point , at which time the death benefit ceases . Life insurance will eventually pay out if the policy is kept up correctly and if the owner keeps the policy long enough . It is a permanent policy to cover the insured person 's `` whole '' life . It may also pay the owner some dividends if it is a `` participating '' policy . Again , this is a very simple explanation , but gives you a general idea of how Whole Life Insurance works . 