
What is a whole life insurance policy and how does it work?
Whole life insurance is the most common type of permanent coverage. Unlike a term life insurance policy—which expires after a specified period, such as 20 or 30 years—a whole life insurance policy can last until age 100.
Whole life insurance policies are typically more expensive than term policies, but they come with fixed premiums that don’t rise over time. Like other permanent life insurance, whole life insurance has a significant upside. In addition to providing financial protection for your loved ones, it also contains a cash value component that grows over time.
Like any other life insurance plan, you will need to pay premiums. Those premiums get divvied up to fund:
Financial Protection for Your Beneficiaries
When you pass away, your beneficiaries will typically get a tax-free, lump-sum payment called a death benefit.
The Policy’s Cash Value
The cash component is like a savings account that grows tax-deferred at a guaranteed interest rate to supplement your retirement income. You can take out a loan or withdraw funds from your life insurance policy’s accumulated cash value. Withdrawals are tax-free as long as the withdrawal amount doesn’t exceed your total premiums paid.
Depending on the policy, withdrawing too much from the accumulated cash value might reduce—or cancel out—the death benefit that your loved ones would receive. So make sure that you understand how your whole life policy works.
Benefits of a Whole Life Insurance Policy

Whole life insurance offers:
- Lifetime coverage: As a permanent life insurance policy, whole life can last until the age 100.
- A guaranteed death benefit: When you die, your beneficiaries receive a guaranteed cash payout.
- Cash value: Your policy’s accumulated cash value grows at a fixed rate on a tax-deferred basis.
- Fixed premiums: Premiums never go up as long as you pay them on time. At age 100, you stop paying premiums.
AAA Whole Life Insurance Quote
Whether you’ve already chosen a policy or are still exploring, AAA makes it easy to get a quote or get in touch if you have questions.
Why Choose AAA?

- Competitive, personalized rates to meet your budget and needs
- Easy claims process for your loved ones
- AAA Members receive a 10% discount on term policies
- Excellent customer service from knowledgeable life insurance agents