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What Is Straight Life Insurance?
What is straight life insurance? It’s another name for whole life insurance, a type of coverage that lasts for the rest of your life. We’ll go over its main features and how it’s different from term life below. Whole life has benefits for you and your beneficiaries, including cash value that can provide you with a valuable source of supplemental retirement income.
Here’s what we’ll go over:
Straight Life Insurance Features
Optional Features: Dividends, Paid-Up Additions & More
Straight Life Insurance vs. Term Life
How to Buy Straight Life Insurance
Straight Life Insurance Features
Here are the main features you’ll find on just about any whole life policy. If you’re asking, “What is straight life insurance?”, these features are your answer.
- Lifelong coverage. Straight life is a form of permanent life insurance. Your policy will never expire and you won’t ever have to take another medical exam. You’re covered until the day you die, period. If you develop health issues, it won’t affect your coverage or your premiums.
- Premiums that never go up. Your payments will never increase throughout the life of your policy. Even as you age or develop serious health problems, you’ll pay the same amount every time. This is helpful because the cost of your coverage increases as you age. But because you locked in a rate when you bought the policy, the insurance company cannot increase your rates no matter how long you live.
- Cash value. Part of every payment you make will go into a cash value account. It’s like a savings account attached to your policy. Over time, your cash value will grow with your contributions as well as the guaranteed flat rate of interest your insurer will pay. That rate is locked in when you buy your policy. Later, you can access your cash value through policy loans or withdrawals. We have clients who use that money for home renovations, retirement income, bucket list items, and more. It’s yours to use as you see fit, and you should definitely use it. Most insurers will not transfer the cash value to your beneficiary after you pass away.
- Living benefits. Most insurers offer some form of living benefits – a way to tap into your policy’s death benefit while you’re alive if you need treatment or care for a terminal or severe illness. Every insurer has their own rules, but in general, you should be able to access the death benefit if you’re diagnosed with a terminal illness. You may also be able to do so if you’re diagnosed with a critical or chronic illness – it all depends on your insurer. Some will charge a little extra for riders (policy add-ons) that let you access the death benefit without the terminal illness diagnosis – if you need long-term care, for example. When you’re shopping for a policy, it’s helpful to ask your agent what riders are available so you know before you buy. In most cases, you can’t go back and add these later. They need to be selected at the time of purchase.
- Guaranteed death benefit. When you pass away, your beneficiary(ies) will get the full face value of your policy (minus any outstanding policy loans you may have had at the time you passed away). That money is almost always income-tax-free. All your beneficiaries have to do is file a claim, and provide proof of your death (a death certificate, in most cases). Payments are usually fast, within 2 weeks.
Rather talk to a real person? We get it! That’s why we’re here. Ask us all your questions – including “What is straight life insurance?” and let us help you one-on-one. Call us at (800) 521-7873 or start your search with a free term life quote by clicking the button below.
Optional Features: Dividends, Paid-Up Additions & More
Depending on the insurer and policy you choose, you may have even more features that can help you make the most of your policy.
- Dividends. If you buy your policy from a mutual company (look for the word “mutual” in the name, like MassMutual or Mutual of Omaha), it means the company is owned by its policyholders. If the company exceeds is goals for profit in a particular year, it returns any excess to the policyholders in a dividend payment. These types of polices are often called “participating whole life.” When you see the word “dividend” or “participating,” that means you have the opportunity for your policy to earn you more money than the interest payments on your cash value alone.
- Paid-up additions. If your policy pays dividends, you can use those dividends to buy additional coverage. It’s like a policy within a policy: your dividend buys you a small policy (say, $50,000) with its own cash value that grows over time. Using paid-up additions to add onto your policy is a great way to build even more cash value. If you want to use your policy’s cash value as supplemental retirement income, paid-up additions can really boost the amount of cash available to you later.
- Survivorship options. Some insurers have survivorship options, which means your policy covers you and a spouse. It would pay out to your beneficiaries when both you and your spouse have passed away. If both you and your spouse are looking for coverage, ask us about survivorship options. If one of you has health issues, it may be more affordable to get one of you covered with a survivorship option than to cover both of you.
Rather talk to a real person? Sometimes it’s just easier that way! Ask us all your questions – including “What is straight life insurance?” and let us help you one-on-one. Call us at (800) 521-7873 or start your search with a free term life quote by clicking the button below.
Straight Life Insurance vs. Term Life
Since you found us by searching for “what is straight life insurance,” you’re probably not sure yet if it’s the right type of coverage for you. Since most of our clients buy term life policies, we’ll compare features between the two to help you make a decision.
| Feature | Straight Life Insurance | Term Life Insurance |
|---|---|---|
| Lifelong coverage | Yes | No - your coverage expires at the end of the term you select |
| Cash value | Yes | No |
| Living benefits | Yes | Yes |
| Level premiums (your payments do not increase as you age) | Yes | Yes |
| Possibility for dividends and paid-up additions | Yes, if purchased from a mutual company | No |
| Guaranteed tax-free death benefit | Yes | Yes |
| Affordability | More expensive than term life | Most affordable type of coverage |
Rather talk to a real person? Insurance can be confusing, but that’s why we’re here. Ask us all your questions – including “What is straight life insurance?” and let our licensed insurance advisors help you one-on-one. Call us at (800) 521-7873 or start your search with a free term life quote by clicking the button below.
How to Buy Straight Life Insurance
If you decide that straight life is the right choice for you, here are your next steps. We can help with all of these – just give us a call at (800) 521-7873 and we’ll walk you through the entire process.
- Select a coverage amount. Not sure how much you need? Check out our calculator.
- Get a free quote. Life insurance is priced based on facts about you: your age, sex, coverage amount requested, health history, family health history, and lifestyle (job and hobbies). The younger and healthier you are, the less your policy will cost. There will be slight price differences between insurers, and you can run quotes for more or less coverage until you hit a combination of cost and coverage that meets your needs.
- Choose a policy and insurer to apply for. Once you’ve made a choice, we’ll help you submit your application. This can all be done over the phone, using digital eSignatures.
- Take the free medical exam, if required. Some policies require a brief medical exam. If required, the insurance company will send a mobile medic to your office or home at a time that’s convenient for you. They’ll measure your height and weight, and take blood and urine samples. The health information they gather will help the insurer price your coverage appropriately. If you’d rather skip the exam, let us know! We can shop specifically for non-medical exam policies.
- Wait for the insurer to complete the underwriting process. Depending on the policy and the insurer, the underwriting process can take a few weeks. (If you selected a non-med policy, you’ll almost always get a response in under 48 hours.) We’ll be in contact with you and the insurer throughout the process so you always know what’s going on. Sometimes, the insurer will come back with requests for additional information or health records. If so, we’ll work with you to get them what they need so you can get a coverage offer as quickly as possible.
- Put your policy in force. If the insurance company approves your application, they’ll make an offer for coverage. At that point, it’s up to you to decide if you want to take the policy at the price they offered. This is another point where you want to work closely with your agent: is the price they offered a fair one? Our LifeQuote agents will know, and we have an underwriting team to back up our opinions. If the offer looks good and you want to take it, all you have to do is make the first payment and sign the final paperwork the insurance company sent to you. It sounds like a long process, but once you’ve got coverage, you can rest easy knowing your loved ones are protected!
Rather talk to a real person? We’re always happy to help. Ask us all your questions – including “What is straight life insurance?” and let us help you one-on-one. Call us at (800) 521-7873 or start your search with a free term life quote by clicking the button below.
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