Whole Life Insurance Whole Life Insurance The benefits of whole life insurance include guaranteed fixed premiums, a guaranteed death benefit and guaranteed cash value growth. This means that with whole life insurance, your premiums never increase as long as they’re paid, and you can also take advantage of “living benefits,” which enable you to borrow against the cash value of the policy for any purpose while you’re alive.1 Borrowing cash from the policy can help in financing life-changing events or emergencies, and the policy’s cash value accumulates on a tax-deferred basis. One thing to keep in mind when purchasing whole life insurance is that loans reduce the death benefit of your policy, and loan interest should be repaid in order to prevent lapse.CRN201903-208966 1 The decision to purchase life insurance should be based on long-term financial goals and the need for a death benefit. Life insurance is not an appropriate vehicle for short term savings or short-term investment strategies. While the policy allows for loans, you should know that there may be little to no cash value available for loans in the policy’s early years. Distributions under a life insurance policy (including cash dividends and partial/full surrenders from a whole life policy or withdrawals from a universal life insurance policy) are not subject to taxation up to the amount paid into the policy (cost basis). If the policy is a Modified Endowment Contract, any distributions or policy loans are taxable to the extent of gain and are subject to a 10% tax penalty if the policy owner is under age 59½. Access to cash/account values through borrowing, partial surrenders, or withdrawals will reduce the policy’s cash/account value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured.