Whole Life Insurance as an Asset Class: 10 Things to Consider

by Josh Martin

Updated February 22, 2024, at 12:48 PM

In today’s uncertain economic climate, investors are always looking for stable asset classes to safeguard their financial future. But one potential investment gem often goes overlooked.

Whole life insurance is a type of permanent life insurance that provides coverage for the insured’s entire lifetime as long as premiums are paid. Additionally, whole life insurance builds cash value over time and offers both a death benefit and an investment component.

Whole life insurance is gaining traction as a unique asset class, and for good reason. Since this instrument offers a combination of life insurance protection and long-term investment growth, it’s appealing to those looking for a steady source of funds.

To determine if this approach suits your client, here are the benefits and factors you should consider.

Benefits of Whole Life Insurance as an Asset Class

Guaranteed Cash Value

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Whole life insurance policies include a guaranteed cash value component to ensure the policy’s value will increase regardless of market conditions. This provides some financial security, especially during economic downturns.

Tax-Deferred Growth

The cash value growth in whole life insurance occurs tax-deferred, meaning that policyholders don’t pay taxes on the gains until they withdraw the funds. This tax advantage can be particularly valuable for high-net-worth clients looking to reduce their tax burden while building wealth.

Death Benefit Protection

In addition to the cash value component, whole life insurance provides a death benefit that is paid to the beneficiaries upon the insured’s passing. This death benefit acts as a safety net for dependents, ensuring their financial well-being in the event of the policyholder’s death.


Adding whole life insurance to an investment portfolio can provide diversification. As a non-correlated asset class, it can help reduce overall portfolio risk, especially amid volatile markets.

Creditor Protection

In many jurisdictions, a whole life insurance policy’s cash value and death benefit enjoy protection from creditors. This feature can benefit individuals looking to shield their assets from potential legal claims.

Related: Life Insurance as Part of a Retirement Plan

Factors to Consider Before Investing in Whole Life Insurance

Long-Term Commitment

When investing in whole life insurance, policyholders are in it for the long haul. Clients must be prepared to keep the policy in force for an extended period to maximize its benefits fully.

Premium Payments

Unlike term life insurance, whole life insurance often comes with higher premium payments. Before committing, make sure you and your client have fully assessed their financial situation to ensure they can comfortably meet the premium obligations.

Financial Strength of the Insurer

Choosing a whole life insurance provider is an essential step in the process. Take time to thoroughly investigate the insurer’s financial stability and ratings with your client.

Policy Expenses

Whole life insurance policies come with various fees and expenses. Evaluating these costs is essential to determine the policy’s overall performance and value.

Flexibility and Customization

Different whole life insurance policies offer varying levels of flexibility and customization. You must thoroughly assess your client’s specific needs and goals to find an approach that aligns with their financial objectives.

Related: Compare Insurance Offerings with Life Insurance Policy Reviews [Case Stud Included]

Whole Life Insurance for Business Owners

Whole life insurance also offers several key benefits for business owners, including:

Tax-Advantaged Liquidity

With the tax benefits of whole life insurance, business owners can access tax-free policy loans for business expenses. The repaid capital becomes available for future business needs, with carriers paying interest on the policy’s total cash value. The policyholder determines repayment terms.

Partner Buyout Funding

The cash value from a whole-life policy can fund the buyout by a surviving partner if there’s a partnership agreement in place. Because whole life insurance policies are for the duration of life, the business will collect on the death benefit when the departing owner dies, even if it’s many years after they have retired or otherwise left the company.

Estate Equalization

Cash from a whole life policy plays well in an estate equalization situation if not all beneficiaries wish to own the business. Some heirs can receive cash from the policy, while others receive business ownership.

Balance Sheet Asset

The policy’s cash value serves as an asset on the business’s balance sheet, which can strengthen financial credibility when seeking loans or working capital.

Whole Life Insurance FAQs

Q1: Is whole life insurance suitable for everyone?

A: Whole life insurance may not be suitable for all clients, as it requires a long-term commitment and higher premium payments. Assessing your client’s financial goals and needs before investing is an essential part of the process.

Q2: Can a policyholder access the cash value of the whole life insurance policy before they retire?

A: They can access the cash value through policy loans or withdrawals. However, it’s important to understand the implications and potential impact on their policy’s performance.

Q3: What happens to the cash value if a policyholder cancels their whole life insurance policy?

A: If a client chooses to cancel their whole life insurance policy, they may receive the surrender value, which is the cash value minus any applicable fees.

Q4: Is the death benefit of whole life insurance taxable?

A: In most cases, the death benefit of a whole life insurance policy is tax-free for the beneficiaries.

Q5: Can policyholders adjust their whole life insurance policy as their financial situation changes?

A: Many whole life insurance policies offer flexibility and customization options, allowing you to help clients adjust the coverage and premiums to align with their changing financial needs.

Let Us Handle the Busy Work

Finding a whole life insurance policy that offers your clients the benefits they want while aligning with their unique goals can be time-consuming.

Our team of experts is readily available to take on the required research, analysis, and case management so you can spend more time focusing on your business.

Discover if whole life insurance is the right investment for your clients by clicking below, and you’ll receive our free Life Insurance Playbook filled with unique concepts and strategies that can strengthen financial plans.

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