A. First of all, 10-pay whole life is a type of whole life insurance policy that is contractually paid up in 10 years.
A major difference between it and the other types of whole life policies is its significantly higher early year cash values, as well as higher supplemental retirement income.
Life Insurance Needs
For example, for a female at age 40, by budgeting $1,000 per month to fund such a policy, you will have an initial death benefit of $380,427 (this amount is determined by solving for the lowest life insurance coverage amount given $1,000 per month contribution, thus maximizing cash value of this policy).
At the end of 10 years, your account will have cash value of $135,371 - more than your cumulative premium payment. If you are not happy with the policy once it's paid up, you can surrender it without losing any money.
Supplement Retirement Income
This policy also helps to supplement your retirement income. Specifically, at age 65, you can withdraw $19,479 each year until age 86 which is your projected life expectancy). Over 21 years, you could receive over $300,000 cash - free of tax.
At the end of age 86, even you have taken out more than $300,000 to supplement your retirement income, you will still have death benefit of $221,513 and it will gradually to decrease by remains in force until age 100.
The bottom line
The shorter payment period gives policy owners a time horizon to focus on, once the policy is paid up, its cash value will continue to grow, tax free. And policy owners can take out money, tax free, during retirement time.