Understanding whole life insurance quotes & rates

There are many different options when it comes to finding the right life insurance policy to financially protect your loved ones when you die. Whole life insurance is a life insurance policy that lasts your entire life, even though you only have to pay premiums until a certain age or for a certain number of years. The policy is permanent, and its premiums are typically more expensive than term life insurance, which is a policy that only lasts until a set expiration date.

Why are whole life insurance rates so high?

Permanent life insurance policies are costlier and have a higher premium than term life insurance policies. Here’s why: 

Whole life coverage lasts for life

Whole life insurance premiums are so high because the policy lasts your entire life and never expires. Typically, you only pay premiums for a whole life insurance policy until a certain age (such as 65 years) or for a period (such as 20 years). Unlike term life insurance where the policy expires or lapses if you do not pay the premiums, you retain the same amount of coverage even when you’re done paying premiums.

Whole life insurance has a cash value component

Each month, a certain portion of the premiums is paid into a tax-deferred savings account that functions similarly to an investment account, called the cash value. The exact amount that goes into savings is determined by your individual policy. With its annual dividends, the cash value and death benefit grow (or shrink) over time.

Generally, a cash value life insurance policy shouldn’t be used as a primary source of retirement income because it has limited investment options and relatively low rates of return (only 3 to 4%) compared to dedicated investment options, such as a 401(k) or IRA. [1] There are better ways to invest than with a cash value policy.

What can you do with a whole life insurance policy’s cash value?

As your whole life insurance policy builds cash value, you can access the funds in a few different ways—each with its own risks.

• You can withdraw tax-free money. Though, if you surrender your policy or it becomes void, the money you have withdrawn will be considered taxable income.

• You can take out a loan. You’ll usually be able to do so with low interest rates, but you will be borrowing against your policy and will accrue interest until you pay the loan off. Your dependents would also lose a part—or all—of the death benefit if you die before you’ve paid the loan back. Any amount you still owe will be deducted from the benefit to pay off the loan.

• You can surrender your policy and collect the cash value you’ve accumulated. The cash value of your policy will usually take two or three decades to grow, so if you surrender the policy early on, you’re unlikely to have accumulated much cash beyond what you’ve already paid.

→ Learn the ins and outs of the cash value here

Whole life insurance quotes

When you compare typical term life insurance rates to the estimated costs of whole life insurance below, you’ll see that premiums for a whole life policy are a lot higher and fluctuate depending on your payment period. Keep in mind that when purchasing a whole life insurance policy, the insurer will set up quotes based on paying your premiums until you’re 65, 99, and 121.

Other non-traditional payment options for whole life policies (depending on the insurer) are:

• 10 Pay (paying the policy’s lifetime premiums over 10 years)

• 20 Pay (paying the policy’s lifetime premiums over 20 years)

• Single premium (paying the policy’s lifetime premiums upfront)

Like other whole life products, 10 Pay, 20 Pay, and single premium policies offer an additional tax-advantaged savings account.

You’ll spend more money each year for a policy that is paid up to age 65 or 10 Pay and 20 Pay because the premium payments are packed into a shorter period. You’ll spend the least amount annually if you purchase a policy paid up to age 121 (theoretically) because you have more time to pay off the policy.

How are whole life insurance rates determined?

Your premiums will be determined by the life insurance health classification you fall into. There are four life insurance classifications:

• Preferred Plus

• Preferred

• Standard Plus

• Standard

The type of life insurance classification you receive is based on several variables including age, health and lifestyle.

→ Find more information about life insurance classifications here

Example whole life insurance quotes payable until age 65

Example whole life insurance quotes payable until age 99

Example whole life insurance quotes payable until age 121

10 Pay and 20 Pay whole life insurance quotes

10 Pay and 20 Pay policies are mostly useful to people who will have disposable income over the 10- or 20-year payment period, because the premiums are higher than if you pay up to age 65, 99, or 121. 

10 Pay whole life insurance quotes

20 Pay whole life insurance quotes

Whole life insurance rates vs. term life insurance rates

Term life insurance lasts for a set period, after which the policy expires; usually anywhere from 10 to 30 years. It lacks additional components, like a cash value. Term life insurance rates are generally a lot cheaper than whole life insurance, making it a more affordable coverage option for most people.

The permanent nature of a whole life insurance policy, alongside its cash value and finite payment structure, makes it much more expensive than term insurance.

How much more? Over 20 years, a healthy 30-year-old male would pay $145.44 per month for $100,000 of whole life coverage (shown in the chart above for 20 Pay), when he could be receiving five times that coverage ($500,000) for $27.49 per month with a 20-year term life policy.

The chart below shows the comparatively low prices for a 20-year term life insurance policy across age and gender.

→ For a deeper look, read our full guide on term life vs. whole life

Whole life insurance vs. other types of permanent life insurance

Whole life insurance is one of several types of permanent life insurance. This includes universal life insurance and guaranteed universal life insurance, which offer alternative ways to manage your policy and cash value. Whole life is simplest, but the best policy for you depends on your finances.

Variable life insurance cost

How much you pay for variable life insurance is determined by your premium payment schedule. 

Part of the premium payment goes toward the face value and the other part of the payment goes into the cash value. The death benefit amount will also fluctuate over time, but your beneficiaries are guaranteed a minimum payout when you die.

Variable life insurance quotes are tailored specifically to each policyowner. 

Universal life insurance and variable universal life insurance cost

“Universal life insurance policies don't have specific rates, as the premiums are flexible,” says Patrick Hanzel, CFP™ and Advanced Planning Team Lead at Policygenius.

Depending on the amount of coverage you select, you could choose to pay a lower or higher premium based on your personal preferences, though most insurers have a set minimum amount you can pay. For example, if you have a $1 million policy, you can pay $100 per month or $1,000 per month. The accrued cash value from your universal life insurance policy can also be used to pay your premiums.

The lower premium you pay, the higher chance that the policy could lapse in the future, which is why universal life insurance policies can be a risky choice if you haven’t consulted a financial advisor or licensed insurance agent.

Final expense life insurance cost

Final expense life insurance can be simplified issue or guaranteed issue. The cost for either of these policies  is higher than term or whole life insurance policies for less face value. That’s because final expense policies generally have less restrictive underwriting and are used to pay for end-of-life expenses. 

A 60-year-old non-smoking male can expect to pay about $186 per month for a $25k guaranteed issue life insurance policy or about $98 per month for a $25k simplified issue policy.

→ Reach out to a Policygenius agent for free to learn more and compare sample premiums across multiple insurers.

Check out the chart below to see how premiums and policy options compare between whole life, universal life insurance, and guaranteed universal life insurance for a $750,000 death benefit. 

→ Learn more about permanent life insurance policies

Is whole life insurance worth the cost?

A whole life insurance policy probably isn’t for the average person, but there are reasons that someone would want to pay the costlier premiums.

As Patrick Hanzel, Policygenius’ Advanced Planning Specialist and Certified Financial Planner, explains, "It's typically a good option to consider if you have a significant annual income or assets, complex estate planning needs, or a special needs dependent."

An individual with a high net worth who has already maxed out other savings accounts could use whole life insurance as an additional estate planning resource, making the high premium costs worthwhile.

Individuals who are leaving behind dependents with special needs may also find that whole life insurance is a better life insurance policy option for them, as it never expires and will always cost the same price for premiums.