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Understanding whole life insurance rates & quotes

Whole life insurance rates are much higher than term life policies. But do the policy benefits make it worth the cost?

Nupur GambhirPat Hanzel

Nupur Gambhir & Patrick Hanzel

Published September 24, 2020

KEY TAKEAWAYS

  • Whole life insurance rates can be five to 15 times higher than term life insurance rates

  • The cash value and permanence of a whole life insurance policy is what makes it a much costlier policy option

  • Based on Policygenius quoting data, the younger you are when you purchase a whole life insurance policy, the more affordable it will be

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.

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?

High premiums come with the territory; permanent life insurance policies tend to be costlier than term life insurance policies.

Whole life coverage lasts for life

The premiums are exceptionally high for whole life insurance because the policy lasts your entire life, although you only pay premiums until a certain age or for a certain number of years. Unlike other forms of life insurance, you retain the same amount of coverage even when your premium payments are over.

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 over time.

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 reservations and 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 sample quotes

When you compare this to the annual cost of whole life insurance below, you’ll see that premium payments for a whole life policy are a lot higher. 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.

You’ll spend more money each year for a policy that is paid up to age 65 because the premium payments would end earlier in life and are packed into a shorter period. You’ll spend the least amount of money annually if you purchase a policy that pays premiums until you are 121 (theoretically) because you have more time to pay off the policy.

How life insurance rates are determined

Your policy premium’s actual rates will be determined by the life insurance 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.

Whole life insurance premium rates payable until age 65

Rates are for a male with a Preferred (nonsmoker) classification, for $100,000 in coverage and no optional riders.

AGESMONTHLYYEARLY
20$85.45$995.55
30$122.20$1,423.65
40$196.25$2,286.00
50IneligibleIneligible
Methodology: Quotes based on quoting data from whole life insurance policies offered by Policygenius in 2020.

Whole life insurance premium rates payable until age 99

Rates are for a male with a Preferred (nonsmoker) classification, for $100,000 in coverage and no optional riders.

AGESMONTHLYYEARLY
20$73.47$856.00
30$99.14$1,155.00
40$144.89$1,688.00
50$223.94$2,609.00

Methodology: Quotes based on quoting data from whole life insurance policies offered by Policygenius in 2020.

Whole life insurance premium rates payable until age 121

Rates are for a male with a Preferred (nonsmoker) classification, for $100,000 in coverage and no optional riders.

AGESMONTHLYYEARLY
20$58.45$681.00
30$82.06$956.00
40$122.91$1,432.00
50$180.16$2,099.00
Methodology: Quotes based on quoting data from whole life insurance policies offered by Policygenius in 2020.

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10 Pay and 20 Pay whole life insurance rates

People who want to expedite the payment process can purchase a type of whole life insurance called “10 Pay” or “20 Pay” life insurance, where you pay for 10 years or 20 years, respectively, and your premiums could be as high as $2,000 per year. These policies are mostly useful only to people who have a disposable income over that period and want an additional tax-advantaged savings account because they maxed out all their other options.

10 Pay whole life insurance rates

Rates are for a male with a Preferred (nonsmoker) classification, for $100,000 in coverage and no optional riders.

AGESMONTHLYYEARLY
20$169.09$1,970.00
30$238.79$2,782.00
40$337.58$3,933.00
50$470.97$5,487.00

Methodology: Quotes based on quoting data from whole life insurance policies offered by Policygenius in 2020.

20 Pay whole life insurance rates

Rates are for a male with a Preferred (nonsmoker) classification, for $100,000 in coverage and no optional riders.

AGESMONTHLYYEARLY
20$110.93$1,292.35
30$145.44$1,694.40
40$210.49$2,452.30
50$311.59$3,630.15

Methodology: Quotes based on quoting data from whole life insurance policies offered by Policygenius in 2020.

Whole life insurance rates vs. term life insurance rates

Term life insurance lasts for a set period; usually anywhere from five to 35 years. It also lacks any additional components (like a cash value), and term life insurance rates are generally a lot cheaper than whole life insurance.

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

How much more? Over a comparable period of time, a healthy 30-year-old male would pay $122 per month for $100,000 of whole life coverage (shown in the chart above), when he could be receiving $500,000 of coverage for $28.73 per month with a term life policy.

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

AGE $500,000$750,000$1,000,000$2,000,000
20Female$21.65$29.77$35.03$64.81
Male$28.26$39.76$47.25$89.25
30Female$23.02$31.88$37.43$69.61
Male$28.73$40.48$48.20$91.15
40Female$33.80$48.07$52.72$112.91
Male$41.02$58.48$72.69$140.13
50Female$71.68$104.60$132.64$232.74
Male$94.57$138.68$176.97$348.68

The above information is based on quote averages of policies offered by Policygenius as of September 2020. Quotes provided by our 11 partner life insurance companies: AIG, Banner, Brighthouse, Lincoln, Mutual of Omaha, Pacific Life, Principal, Protective, Prudential, SBLI, and Transamerica.

→ 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 policies. These policies include universal life insurance and guaranteed universal life insurance. Check out the chart below to see how whole life stacks up against universal life insurance and guaranteed universal life insurance.

POLICY DETAILSWHAT DOES IT MEAN?WHOLE LIFE INSURANCEUNIVERSAL LIFE INSURANCEGUARANTEED UNIVERSAL LIFE INSURANCE
No-lapse guarantee.Your policy will be in effect as long as you make premium payments.YesNoYes
Cash-value accumulation.Your policy accumulates a cash value that can be withdrawn or used as a loan.YesYesNo
Paid-up at a specific age.You only need to pay premiums up to a certain age.YesNoYes
Benefit amount increases.Your policy's cash-value interest can be added to the death benefit.YesNoNo
Monthly premium cost for a 40-year-old male in a Preferred health rating purchasing a $750k policyHow much you pay to keep your policy active if you choose to make payments on a monthly basis$975Variable and individualized cost$366
Yearly premium cost for a 40-year-old male in a Preferred health rating purchasing a $750k policyHow much you pay to keep your policy active if you choose to make payments on an annual basis$11,207Variable and individualized cost$4,207

Methodology: Sample premium rates based on a life insurance policy for a non-smoker 40-year old male in Preferred health rating in the New York area; quotes are based on quoting data from whole life insurance, universal life insurance, and guaranteed universal life insurance policies offered by Policygenius in 2020.
→ 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 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 dependants 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.

Insurance Expert

Nupur Gambhir

Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius in New York City. Previously, she has worked in marketing and business development for travel and tech. She has a B.A. in Economics from Ohio State University.

CERTIFIED FINANCIAL PLANNER™ & Advanced Planning Specialist

Patrick Hanzel

CERTIFIED FINANCIAL PLANNER™ & Advanced Planning Specialist

Patrick Hanzel is a CERTIFIED FINANCIAL PLANNER™ on the advanced planning team at Policygenius. He has eight years of industry experience and previously worked as an advisor and associate at Northwestern Mutual.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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