Whole life insurance

Whole life insurance is a permanent policy that lasts your whole life. It includes a cash value savings component, which makes it more expensive than other types of insurance.

Headshot of Policygenius editor Nupur GambhirAmanda Shih author photo


Nupur Gambhir

Nupur Gambhir

Life Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius and licensed Life, Health, and Disability agent in New York.


Amanda Shih

Amanda Shih

Editor & Licensed Insurance Expert

Amanda Shih is an insurance editor and licensed Life, Health, and Disability agent at Policygenius in New York City. Her work has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

Expert reviewed

Expert reviewed

This article has been reviewed by a licensed Policygenius expert to ensure that sources, statistics, and claims meet our standard for accurate and unbiased advice.

Learn more about our editorial review process.


Patrick Hanzel, CFP®

Patrick Hanzel, CFP®

CERTIFIED FINANCIAL PLANNER™ & Advanced Planning Team Lead

Patrick Hanzel is a CERTIFIED FINANCIAL PLANNER™ and Advanced Planning Team Lead at Policygenius.

Published October 20, 2021|4 min read

Policygenius content follows strict guidelines for editorial accuracy and integrity. Learn about our

editorial standards

and how we make money.

Purchasing whole life insurance is an easy way to financially protect your loved ones without worrying about policy expiration dates. Like all life insurance products, whole life pays a tax-free death benefit to your beneficiaries upon your death. Unlike a term life insurance policy, though, which you may very well outlive, whole life insurance lasts for the rest of your life. So as long as you maintain the policy, it will pay out on your death. 

While most people will find term life insurance more affordable, the permanence of whole life coverage and the tax-deferred cash value make it a good choice for high earners or people with lifelong financial obligations.

Whether you’re ready to buy whole life insurance or just want to learn, we’re here for you every step of the way. Our agents can walk you through the process, answer questions, and help you compare quotes so you can find the most affordable option for your needs.

Ready to shop for life insurance?

Start calculator

What is whole life insurance?

Whole life is a type of permanent life insurance (also called cash value life insurance). The policy lasts as long as the premiums are paid and has a savings feature called the cash value that works like a guaranteed investment and grows at a low interest rate set by your insurer. 

Whole life policies are also five to 15 times more expensive than term life insurance. However, whole life insurance is the right choice if you need long-lasting coverage and can afford the premiums.

Whole life insurance quick facts

FeaturesPolicy overview
Average durationLife
Average cost$55-136/month
Guaranteed death benefitYes
Guaranteed cash valueYes
How cash value growsEarns interest at a rate set by your insurer
NotesLow-risk investment compared to other permanent insurance, but you’ll find a better rate of return elsewhere

Methodology: Average cost calculated for male and female non-smokers between 20 and 40 years old in New Jersey in a Preferred health classification, obtaining a $100,000 whole life insurance policy paid until age 99. Life insurance quotes based on policies offered by Policygenius from our partner whole life insurance companies: AIG, Guardian Insurance, MassMutual, and Mutual of Omaha. Individual rates will vary as specific circumstances will affect each customer’s rate. Rate illustration valid as of 6/18/2021.

Benefits of whole life insurance

Most people find that the high cost of coverage and low returns that whole life insurance provides are not worth the cost. For some, however, it makes sense to choose a whole policy over a term one:

  • Coverage lasts your entire life

  • Policy earns interest through the cash value

  • Guaranteed rate of return on cash value

  • Tax-deferred investment option, ideal if you maxed out your other retirement accounts

How much does whole life insurance cost?

Whole life policies are pricey. On average, permanent coverage can be five to 15 times more expensive than a term policy with the same benefit amount. The range “varies based on the length of the term you are comparing and the type of permanent product and features within that product,” says Patrick Hanzel, a certified financial planner and Advanced Planning Team Lead at Policygenius. For example, some permanent products can have additional benefits like cash value accumulation and a growing death benefit. Others can be lower in cost but not include similar benefits.”

Sample whole life insurance premiums

Coverage amountMonthly paymentAnnual payment
$100,000$89/ mo$1,023/ year
$250,000$213/ mo$2,448/ year
$500,000$421/ mo$4,839/ year
$1,000,000$827/ mo$9,506/ year

Methodology: Sample rates are for a 30-year-old male non-smoker in a Preferred health classification in New Jersey buying a whole life policy paid until age 99. Life insurance quotes based on policies offered by Policygenius from our partner whole life insurance companies: AIG, Guardian Insurance, MassMutual, and Mutual of Omaha. Individual rates will vary as specific circumstances will affect each customer’s rate. Rate illustration valid as of 6/18/2021.

No matter what type of life insurance you buy, your premiums will vary, as they are based on your:

  • Age: The older you are, the riskier you are to insure. Life insurance rates increase by 4.5-9% every year, which is why it's a good idea to buy coverage when you're younger, so you can lock in those rates.

  • Coverage amount: The more life insurance coverage you get, the higher your premiums will be.

  • Health: Medical concerns increase the cost of your premiums. 

  • Term length: Life insurance policies that last longer cost more, which is one reason why whole life costs more than term life insurance.

  • Riders: Adding coverage can increase the cost of your policy, though some riders are free.

Many people overestimate their ability to pay whole life premiums year after year. Approximately 30% of whole policies are surrendered within the first three years and 45% are surrendered within the first 10 years, according to a study by LIMRA and the Society of Actuaries.

→ Learn more about whole life insurance rates

How does whole life insurance work?

A whole life policy can accrue interest over time within its cash value component. The cash value is a separate vehicle than the death benefit and can be accessed while you’re living in the form of a withdrawal or policy loan, though sometimes with a penalty. While it likely won't grow as quickly as dollars in the market could, it can be a more steady, tax-deferred growth account that you can withdraw from.

It is worth keeping in mind, however, the returns on cash value in comparison to the premiums you've paid may be small because insurance companies charge administrative fees to manage your policy that a typical investment company doesn't. The usual breakeven point (when cash value starts to exceed cumulative premiums paid) might take somewhere between 10 and 20 years. The death benefit on the policy is also payable upon death just like a term policy, so the insurer is still on the hook for that lump sum amount to your beneficiaries if you were to pass away.

Types of whole life insurance

There are some variations on standard whole life insurance that differ in the policy terms, how your cash value is invested, or how long you pay premiums. Common types of whole life include:

→ Read more about the types of whole life insurance

How to buy the best whole life insurance policy for you

No one type of coverage is best for every person. Here's how to find the best whole life policy for your family’s needs:

  1. Calculate how much coverage you need. The amount depends on your income — Policygenius experts recommend at least 10-15 times your salary — any debts you have, and the financial needs of your family. 

  2. Decide what type of whole life insurance to buy. A standard whole life policy is the simplest, but other types of permanent coverage might be a better fit based on your health and financial goals.

  3. Compare companies and quotes. Every company has its own underwriting rules, so one may offer lower premiums than others. Shopping around ensures that you get the best deal.

  4. Compare cash value interest rates. There’s a minimum rate of return on your accumulated cash value, but that rate varies by insurer. Plus, some providers pay dividends — cash bonuses based on company performance — while others don’t, and rules around accessing the cash value can differ too.

  5. Ask about riders and policy options. Not every insurer offers the same riders or nonforfeiture options — features that keep your policy from lapsing if you stop paying premiums — and costs for adding riders can vary too.

  6. Check trusted third-party agencies. Check organizations like A.M. Best and the Better Business Bureau, which rate a company’s financial health and customer satisfaction, respectively.

Once you’ve chosen an insurance company and policy terms, the steps for buying coverage are straightforward: you’ll fill out your application, then have a phone interview and a medical exam (you can’t skip the exam for most traditional whole life policies). 

The insurer will review your application materials and medical records and issue you an offer of coverage. Once you sign the policy paperwork and pay your first premium, you’re covered for life.

→ Learn more about the best whole life insurance companies

Ready to shop for life insurance?

Start calculator

Is whole life insurance worth it?

Most people are better off with term life insurance, which is much cheaper for the same amount of coverage and still provides plenty of protection to your loved ones.

Using life insurance to invest isn’t a great idea if you have other options, like a 401(k) or IRA. Traditional investment accounts usually grow at a faster rate than cash value accounts.

Whole life coverage is best for people in specific circumstances, like high earners who need an additional investment vehicle, or people who care for someone who needs lifelong financial support. For everyone else, it’s better to pursue a term life policy.

Whole life insurance FAQ

Is whole life insurance a good investment?

Most of the time, a whole life policy shouldn’t be a part of your savings strategy because of the high premiums and low interest.

How much is whole life insurance?

There is no one price point for coverage. The premiums for a whole life policy are based on your life insurance needs, but they are costly.

What are the benefits of whole life insurance?

Whole life insurance offers lifetime coverage and the cash value feature allows you to grow tax-deferred savings while taking on relatively low investment risk.

More about

Life Insurance

Understanding whole life insurance quotes & rates

Whole life insurance rates are much higher than term life policies. But if you need life insurance that doesn't expire and has a cash value, the premiums may be worth it.

Read more

Types of whole life insurance

A whole life policy offers lifelong coverage and cash value, but some types of whole life insurance may be more beneficial than others.

Read more