The Cost of Whole Life Insurance, and Why It’s So High

This permanent policy has a cash value component, which is just one of the reasons it costs so much.
Katia Iervasi
By Katia Iervasi 
Edited by Lisa Green Reviewed by Tony Steuer

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Whole life insurance is more expensive than term life insurance, and for a good reason: it's a complex product. Along with typically setting you up with coverage for life, it grows in value as time goes on.

If you're in the market for a life insurance policy that doubles as a cash asset, be prepared for high premiums.

Factors that affect whole life insurance rates

Life insurance premiums are based on how "risky" you are in the eyes of the insurer. These are some of the factors insurers take into account when setting your rate:

  • Age. Generally, the younger you are, the less you'll pay for a policy.

  • Gender. According to the latest data from the Centers for Disease Control and Prevention, men have a lower life expectancy than women in the United States

    Centers for Disease Control and Prevention. Mortality in the United States, 2020.
    . For that reason, men often pay more for coverage as there's a higher chance the insurer will need to pay out the policy.

  • Health and family medical history. Insurers assess your height, weight, blood pressure and cholesterol levels, as well as any pre-existing conditions such as diabetes. You may also be asked if your immediate family members have been diagnosed with serious health issues.

  • Lifestyle and occupation. If you work in a dangerous job or frequently sign up for thrill-seeking activities like skydiving, your insurer will likely charge higher premiums.

  • Smoking status. Smoking is tied to a host of health issues, such as lung cancer and respiratory disease. As a result, insurers increase smokers' rates to compensate for that risk. This category generally includes people who smoke cigarettes, chew tobacco or vape, among other forms of nicotine use.

  • Driving record. Drivers with moving violations such as DUIs, speeding and reckless driving charges typically end up with more-expensive premiums.

  • Coverage amount. For example, a $1 million policy will be more expensive than a $250,000 policy.

  • Any additional riders. Depending on your insurer, you might be able to add features to your policy for an extra fee called life insurance riders. For example, a waiver of premium rider, which pauses your premiums if you become disabled, is a popular rider. Another common rider is a child term rider, which provides coverage for your children.

These cost factors are unique to permanent policies like whole life insurance:

  • The payment period. Your insurer might offer a "limited payment" option, which lets you pay off your policy in 10 or 20 years or make payments until you reach a certain age, like 65. Since the payments are front-loaded, your premium will be more expensive, and the insurer may not guarantee that the policy will be fully paid off in the specified time.

  • The way you use your dividends. If you have a policy with a mutual life insurance company, you may earn annual dividends based on the company's financial performance. Some insurers allow you to use your dividends to lower your out-of-pocket premiums or purchase additional coverage. Some also allow you to receive the amount of money you earned in dividends in cash.

Life insurance premiums can vary dramatically among insurers. So it's essential to shop around to make sure you're getting a good deal on your policy.

Sample whole life insurance rates

The cost of whole life insurance comes down to the amount of coverage you're buying, the payment period you choose and the life insurance risk class you fall into.

In many cases, you'll pay premiums until a certain age — like 65. But some insurers give you the option to pay your premium in full upfront, or over 10, 15 or 20 years.

To help you compare costs, we've included sample rates for a range of payment options below. These annual rates are based on a $500,000 whole life insurance policy for nonsmokers in excellent health.

Person covered

Pay to age 65

Pay over 10 years

Pay over 15 years

Pay over 20 years

Female, age 30





Female, age 40





Female, age 50





Female, age 60





Female, age 70





Man, age 30





Man, age 40





Man, age 50





Man, age 60





Man, age 70





Source: Quotacy. Valid as of Sept. 28, 2021. Age is at time of issuance. Premiums stay level throughout the length of the policy.

Why whole life insurance has a high price tag

Whole life insurance usually costs more than term life insurance. Here's why:

  • It usually offers lifelong coverage. While term life insurance expires after a set number of years, whole life insurance lasts your entire life. And as you get older, you become riskier to insure.

  • It accumulates cash value. As you pay your premiums, your policy accumulates cash value. That cash value grows on a tax-deferred basis, and your policy becomes a financial asset over time.

  • You can take out loans against your policy. Once you've accumulated enough cash value, you can borrow against your life insurance policy. You could use the funds to cover large purchases like home renovations, college tuition or medical bills, or to supplement your retirement income. Just be aware that taking out significant policy loans without paying them back may cause your policy to lapse, leaving you with no coverage.

  • You may earn dividends. This extra money can help build your cash value, cut down the out-of-pocket costs of your policy or purchase “paid-up additions,” which are extra coverage.

  • You might pay commission fees. For example, if you bought your whole life policy through a life insurance agent or broker, that person typically earns a commission on your premiums for a few years afterward. In comparison, term policies generally pay a commission only on your first-year premiums.

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How premiums compare to other permanent policies

Whole life insurance has level premiums, which means they stay the same. This feature sets it apart from most other permanent life insurance policies.

If you want the freedom to adjust your premiums, look into universal life insurance, whose cash value earns interest. And if you're a seasoned investor, variable life and variable universal life insurance come with higher risk and higher potential rewards.

More about whole life insurance

Learn more about whole life insurance and find the right policy for your coverage needs.

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