Understanding Whole Life Insurance Whole life insurance guarantees payment of a death benefit to beneficiaries in exchange for level, regularly-due premium payments . The policy includes a savings portion, called the “cash value,” alongside the death benefit.
If you outlive the policy, you get back exactly what you paid in, with no interest . The money isn't taxable, as it's simply a refund of the payments you made. In contrast, with a regular term life insurance policy, if you're still living when the policy expires, you get nothing back.
The death benefit of a life insurance policy represents the face amount that will be paid out on a tax-free basis to the policy beneficiary when the insured person dies . Therefore, if you were to buy a policy with a $1 million dollar death benefit, your beneficiary will receive $1 million upon your death.
If the owner dies before the insured, the policy remains in force (because the life insured is still alive). If the policy had a contingent owner designation, the contingent owner becomes the new policy owner.