What is a Straight Life Policy?

Sean McGinn is an assistant director of Product Positioning in the Risk Products department at Northwestern Mutual.

When you have the right life insurance in place, you can get peace of mind that your loved ones will be OK financially. Among the various kinds of life insurance, one that stands out for its simplicity and reliability is straight life insurance. We’ll set you straight on this phrase by explaining what it means and why people choose it.

Is straight life insurance the same as whole life insurance?

“Straight life insurance” usually refers to a type of whole life insurance. Whole life insurance lasts your entire lifetime as long as premiums are paid. It also has many benefits you can use throughout your life.

The “straight” aspect of “straight life insurance” can refer to unchanging, or level, premiums. With this type of policy, you can count on how much you’ll pay even as you get older and the economy changes. This can be a significant advantage, particularly if you prefer a straightforward approach to financial planning.

Straight life insurance is set up very differently from universal life insurance. With universal life, you can get lots of flexibility on the amount you pay in premiums and your death benefit. That’s an advantage when your income is unpredictable from year to year and it’s helpful to pay different amounts in different years.

Why do some people purchase a straight life insurance policy?

People who choose this type of life insurance may prioritize long-term security. They get the reassurance of lifetime coverage—through job changes or health challenges. And a milestone like getting married, having kids, or buying a house or condo can be a strong motivator. These increased responsibilities mean that more people are counting on your income, regardless of unforeseen circumstances. By planning proactively, you can provide financial security for your loved ones.

The benefits of whole life insurance can make straight life insurance really appealing. As long as you pay your premiums, your death benefit will never expire. It’s guaranteed to be paid regardless of when you die, whether that’s sooner than expected or not for another 50 years.

And the premiums for your whole life insurance policy are guaranteed to remain fixed and consistent for as long as you have your policy. Your premium also contributes to your cash value. This key benefit builds slowly in the early years of the policy and then grows more quickly. You can then access it at any time for any reason.¹

In addition to guaranteed cash value growth, many life insurance companies pay dividends.²  While you can take dividends as cash or use them to pay a portion or all of your premium, many people reinvest them in their policies. Benefits like these can make a whole life insurance policy one of the most flexible parts of your financial plan.

It’s good to think ahead to retirement—and we’re ready to help. Your Northwestern Mutual financial advisor can help you use the right tools to plan ahead for retirement. They’ll ask deep questions to get to know you and can be your co-pilot as you look toward the future.