Life insurance has been around for thousands of years. It isbelieved that the Romans originated the product to fund burials ofmilitary personnel who were members of a burial club.

Over time, the reasons for owning life insurance grew morecomplex, such as to meet estate planning or business planningneeds, in addition to personal protection. Product innovations anddesigns also occurred to meet varying factors, including economicconcerns, investment market cycles, medical advances and increasesin longevity.

Throughout that time, one proposition has remained constant:None of us know when we’re going to die. Wholelife insurance is uniquely positioned to meet that proposition and,thus, has seen a resurgence in popularity because unlike terminsurance, it is a permanent life insurance product. And unlikevariations of universal life products, it is not subject tointerest rate and market fluctuations provided the requiredpremiums are paid.

Once thought of as an expensive form of death protection,whole life insurance lends itself well tovarious scenarios. Among them, consider these six:

Scenario 1: Clients who want a higher returnwith lower risk.

Given current low interests, which are yielding minusculereturns on bank and fixed income financial products, whole lifeinsurance’s cash value growth is now seen as ahigher-yielding financial product with similar risk profiles. Yes,it is still life insurance, but the cash value element is oftenthought of as a bond or CD alternative.

Insurance carriers guarantee an interest rate in cash values.Mutual companies like The Guardian Life Insurance Company ofAmerica also often provide an annual dividend which is notguaranteed, (although Guardian has paid a dividend every year since1868). The dividend further increases cash values, all of whichgrows tax-deferred and can potentially be accessed income tax-freethrough withdrawals to basis and loans thereafter.

Scenario 2: Clients who want ahealthy investment portfolio.

Whole life insurance is a non-correlated asset class in ahealthy, diversified investment portfolio. For entrepreneurs andmore aggressive investors, whole life insurance serves as acounter-balancing force against concentrated positions andaggressive investments.

Scenario 3: Clients who need permanentprotection.

The average mortality rate has increased dramatically in recenttimes due to advances in medical technology, greater access tohealthcare, and greater awareness of wellness. As a result,families often realize that there is no standard or finite periodto maintain life insurance, such that when the period is over, the“need” or desire somehow goes away.

Other products and designs may not be able to guarantee deathbenefit coverage through advanced ages without:

• increasing premiums on existing coverage;

• adding to underwriting to get new coverage; and

• reducing coverage on existing policies to maintain the policyand/or premium.

The above shortcomings have led to a renewed awareness of wholelife insurance. By design, the death benefit is guaranteed if thepremium is paid, thus ensuring the policy will be there whenprotection is needed. Premiums have been amortized over theexpected life of the product so as not to place sticker shock onthose who are no longer actively employed but still want and needcoverage.

Scenario4: Clients who have business planning needs.

In business planning situations, advisors and clients havetraditionally turned to term insurance to fund buy-sell agreements.Increasingly, however, business owners have discovered that thelikelihood of dying while in the business is remote.

It is more likely that the business owner will become sick,injured or leave the business due to retirement or some other lifeevent. As a result, the cash value buildup in a whole life policyis an attractive vehicle to create a sinking fund that will act asa down payment on an installment sale or to supplement a lifetimebuyout, while the death benefit ensures funding in the unlikelyevent of death.

If death does not occur, then the policy can be re-purposed forpersonal planning use of the departing owner. A well-draftedbusiness continuation plan can address this situation.

Scenario 5: Clients looking for afavorable cost structure.

Overall, costs of a whole life policy are too oftenmisunderstood. As measured by premium outlay, there is no argumentthat whole life presents the highest premium. However, over alifetime, whole life insurance generally provides both the highestIRR of premium to death benefit (measured at life expectancy) andalso the best cost structure as measured by net present value ofpremiums relative to cash values.

Scenario 6: Clients who need a "forced"savings vehicle.

As increases in college tuition continue to outpace inflation,and as more individuals and families are realizing they won’t besaving enough in traditionalretirement accounts to meet retirement expenses, whole lifeinsurance and its cash value buildup are excellent supplementalsources to accumulate wealth while also protecting the family. Thepremium payments are often seen as a “forced”savings vehicle.

Thus, there are many reasons why whole life products haveenjoyed a resurgence in popularity. For those advisors who don’ttypically work with whole life, perhaps a fresh look iswarranted.