®
a GEBA Insurance Fact Sheet
A LOOK AT WHOLE LIFE INSURANCE
Life insurance is an important part of your financial plan; it can help you protect the people you love when you are no longer
around. There are different types of life insurance that can meet the needs of your family at different periods. Whole life
insurance provides permanent coverage, usually at a consistent cost.
Whole life insurance is a type of permanent life insurance
that covers you from the day you buy the policy until you
die, as long as you continue to pay the premiums. Generally
the premiums do not increase over the life of the policy.
and its death benefits are usually free of income tax. It
can help you to maximize the amount you can pass on
to your heirs or use to establish trusts, such as a special
needs trust.
Cash Accumulation, Dividends and Loans
How Policies are Issued
A whole life insurance policy accrues cash value on a
tax-deferred basis, creating a kind of automatic savings.
Some policies also pay dividends1, that can increase the
value of your benefit. And usually you can take some
of the cash value of your policy in the form of a loan2.
Most insurers require that you undergo underwriting before
a whole life policy is issued. Whole life insurance can be
a good option if you have health issues that make you
ineligible for group term coverage. And if you are younger
and your health is good, you may be able to lock in lower
premiums that will continue for the rest of your life and
coverage that can never be canceled, as long as you keep
your premiums up to date.
An Important Tool in Estate Planning
Whole life insurance can be an important element in estate
planning because its premiums are fixed, it is permanent,
TERM
PERMANENT
Term Life
Whole Life
Universal Life
Premiums
Level premiums for
term of policy
Guaranteed level
premiums for life
Flexible premiums
for life
Cash Value
No
Yes
Yes
Loans/
Withdrawals
No
YesA
YesA
Coverage
Specific term is
defined by the policy
selected, generally
five to 30 years.
LifeB
LifeC
Cash Value
Investment Risk
None
Insurance company
bears risk
Insured bears
interest rate risk
Income replacement
Income replacement/
Supplemental income/
Estate planning/
Legacy planning
Income replacement/
Estate planning/
Legacy planning
Commonly Used For
Loans and withdrawals will decrease the cash value and death benefit.
Provided all premium payments are made and loan indebtedness does not lapse policy.
C
Cash value must be sufficient to pay monthly deductions or a guarantee needs to have been chosen at enrollment.
A
B
(800) 826-1126 or (301) 688-7912 | [email protected] | www.geba.com/life
®
a GEBA Insurance Fact Sheet
A LOOK AT WHOLE LIFE INSURANCE
Whole Life Insurance Pros
> It never expires. As long as you continue to pay your
premiums, you can be confident that your beneficiaries
will receive payment when you die.
> In most cases, the premium remains the same
throughout your lifetime, making it a predictable expense
in your long-term budget.
> T
he policy’s cash value accumulates tax-deferred each
year. In addition, the value of the benefit may increase if
your policy pays dividends1.
> T
he rate of return on the cash value is guaranteed by the
insurance company.
> M
any whole life policies allow you to take a loan against
the value of the policy.2
> A
s with all life insurance, the death benefit generally
passes to your heirs free of federal income tax.
> W
hole life insurance can be an important tool in estate
planning, potentially helping to reduce estate taxes and
fund trusts.
Whole Life Insurance Cons
> Initially, premiums can be significantly higher than
the premiums for comparable amounts of term life
and universal life insurance, especially when you are
younger. However, the level premium feature means
that when you are older, whole life premiums will be
comparable to or even less than the premiums you
would pay if you continued to renew your insurance.
We’re Ready to Help
You can call (800) 826-1126 or (301) 688-7912 to set up
an appointment with one of our licensed Insurance and
Investment Consultants. GEBA Consultants understand
your federal benefits and work with you to understand your
needs and find the best life insurance solution for you. We
shop the marketplace on your behalf to find the best plan.
GEBA works only with highly-rated, reliable insurance
companies, so you can be confident that your benefit will
be there when your family needs it.
Dividends are based on the policy’s applicable dividend sale, which is neither
guaranteed nor an estimate of future performance.
1 Loans against the policy accrue interest set by the company and decrease
the benefit and cash value by the amount of the outstanding loan and
loan interest.
2
• T
here are expenses associated with life insurance. Generally, life insurance
policies have contract limitations, fees and charges, which can include
mortality and expense charges, account fees, underlying investment
management fees, administrative fees and charges for option benefits.
Most policies have surrender charges that are assessed during the early
years of the contract if the contract owner surrenders the policy.
• L
ife insurance is not guaranteed by the FDIC. Any guarantees are contingent
on the claims-paying ability of the issuing company.
• W
ithdrawals of earnings are taxed as ordinary income and may be subject
to surrender charges plus a 10% federal income tax penalty if made prior
to age 59½. Withdrawals reduce contract benefits and values
> T
he rate of return used to build your cash value might
not be comparable to the rates of return of other
savings alternatives.
Whole Life Insurance Might Be Right
for You If:
> You want level-premium protection that will never expire.
> Y
ou want to build tax-deferred cash value that you can
access in your lifetime.
> Y
ou want to be able to take a loan against your plan,
usually on a tax-free basis.2
> Y
ou have estate-planning needs that might be met by
a whole life insurance plan.
> Y
ou want to supplement the survivor benefit of your
federal pension.
(800) 826-1126 or (301) 688-7912 | [email protected] | www.geba.com