Why Is Whole Life Insurance Good? 
I 'll start out by saying that the best life insurance is the life insurance that is the right amount for your needs and is affordable to you . For the most part , it does n't matter whether it 's whole life , term life , or some combination of the two . Whole life is good for a number of reasons : It 's the best way to cover a permanent need - The dividends and cash value build over time and , over a long period of time , the cash value may be more than the premiums you 've paid essentially making it free or better . Premiums are level - the premium you pay when you first get your whole life will be the same for your lifetime . It wo n't increase and , as long as you pay that premium , you 'll always have the policy . It 's flexible - the cash value in your policy is yours and you can do with it what you 'd like . You can take a loan of your cash value or take part of it out if you need to . But , be aware this may affect your future premiums or the death benefit . The cash value grows tax deferred - You do n't get a 1099 for the gain in your policy . You only pay income tax on the gain when you make a withdrawal . The gain in the cash value comes out last - When you make a withdrawal from your policy , your paid premiums come out first and , since you already paid tax on that money -LRB- usually -RRB- , you do n't owe any income tax until you 've withdrawn all your premiums . A couple of qualifiers . My statements apply to the usual scenarios where you pay your premiums from your net income . If there is an arrangement where the premiums are deducted from your income tax , all withdrawals may be taxable . Also , the death benefit may become taxable to the beneficiary . These are higher level arrangements that would take a lot longer to explain . Bottom line , whole life insurance is good because it does things that no other life insurance program can . Used for the correct situation , it 's the best at what it does . Find a good agent that will take the time to evaluate what you need and build a program that covers what you need at a price you can afford . The best life insurance is the insurance you have in force . If you ca n't afford it and let it lapse , it does n't do anything . Trust your agent and listen to their advice . 