From the end of World War II through the late 1960s, whole life insurance was the most popular insurance product. Policies secured income for families in the event of the untimely death of the insured and helped subsidize retirement planning. After the passing of the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1982, many banks and insurance companies became more interest-sensitive.1
Individuals weighed the benefits of purchasing whole life insurance against investing in the stock market, where annualized return rates for the S&P 500 were, adjusted for inflation, 14.76% in 1982 and 17.27% in 1983.2 The majority of individuals then began investing in the stock market and term life insurance, rather than in whole life insurance.
A whole life insurance policy gives individuals and their families financial security against the loss of a breadwinner. For families that rely on the income of a single person, a whole life policy can provide financial security against the sudden loss of a breadwinner.
Whole life insurance are also useful for businesses as a contingency plan for the loss of a key employee or partner. If anything befalls such a key employee, a whole life policy can provide a financial offset to the loss of their skills or expertise. If the deceased is part owner of the company, a whole life policy can provide the remaining owners with enough capital to buy out the deceased partner's share of the business.