What Exactly Is Whole Life Insurance And How Does It Work? 
Whole life insurance is financial protection for your life and your income . The purpose of life insurance is to replace income lost when you pass away . Your beneficiary -- the person you chose to receive the replacement money -- will receive a check or a series of checks when you pass . In most cases , a beneficiary is a spouse or a child . A beneficiary should always be someone who depends on your income to survive . Whole life insurance covers you for your entire life . A major difference between whole life and term life is that whole life grows cash value . Cash value is somewhat of a savings account within your insurance policy . In the first few years that you pay into the policy , the insurance company charges higher rates than is necessary to insure your life . The extra amount that you pay goes into the cash value account . Cash value grows over time and can be borrowed against if you need cash . 