What is whole life insurance and how does it work?

Whole life insurance is permanent life insurance that stays in force for the insured's entire life and builds cash value, unlike term life, which covers a set period and carries no cash value. Because the coverage is permanent and the premiums fund the cash value, permanent policies typically charge much higher premiums than term for the same death benefit. A medical exam is not always required: simplified issue and guaranteed issue policies rely on a health questionnaire or no questions, and they come with lower coverage limits than fully underwritten policies.