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When shopping for life insurance, you have a choice between two main types: term and permanent. Although term policies are sufficient for most people, permanent life insurance usually offers lifelong coverage and the opportunity to build cash value you can borrow against — making it suitable for some applicants.
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What is permanent life insurance?
Permanent life insurance generally covers you for the rest of your life and pays out regardless of when you die — as long as your policy remains in force. These types of policies also include a cash value component that you can withdraw from or borrow against while you’re still alive. Depending on the policy, you may be able to adjust your premium payments and coverage amount to fit your needs.
Permanent life insurance: Key facts
Costs More expensive than term life insurance
Benefits Lifelong coverage
Who it's best for People leaving an inheritance or covering final expenses
Types of permanent life insurance
If you're shopping for life insurance and decide to buy a permanent life policy, there are many types to choose from. Your decision will depend on how much risk you’re comfortable with and how much flexibility you want.
| Type of permanent life insurance | Premiums | Death benefit | Cash value growth |
|---|---|---|---|
| Whole | Fixed. | Fixed. | Fixed interest rate. |
| Universal | Adjustable. | Variable. | Variable rate set by insurer. |
| Indexed universal | Adjustable. | Variable. | Tied to stock or bond index. |
| Variable | Fixed. | Variable. | Investments of your choice. |
| Variable universal | Adjustable. | Variable. | Investments of your choice. |
Whole life insurance
Whole life insurance policies have fixed premiums and a cash value component that (slowly) accumulates.
Insurers may offer different payment schedules, such as paying premiums up to age 100, paying premiums for a fixed number of years (such as 10, 15 or 20 years while maintaining coverage after payments stop) and single-payment policies. When you die, your beneficiaries typically receive the face amount of the policy, not the face amount plus cash value. You can withdraw money or borrow against the cash value during your lifetime — just know that if you don't pay it back, the insurer will reduce the life insurance death benefit by the same dollar amount.
Universal life insurance
The main draw of universal life insurance is that it allows you to adjust your premiums and death benefit, giving you flexibility as your financial circumstances change. You can also combine the cash value with the death benefit to increase the payout to your beneficiaries, though the premiums will be more expensive if you choose this option.
Indexed universal life insurance is a specific type of universal life insurance that’s tied to a stock or bond index, like the S&P 500. It offers similar flexibility in premiums and death benefits as universal life.
Variable life insurance
Variable life insurance offers policyholders the opportunity to put their cash value in investments of their choosing, which can make this type of coverage riskier than whole or universal life. You may have the option — similar to universal life — to include the cash value in the death benefit. Premiums are typically fixed, and returns on the cash value are not guaranteed.
Variable universal life insurance
What do you get when you mash together variable life and universal life? You get variable universal life, or VUL, a type of life insurance with a lot of moving parts. The policy’s underlying cash value is subject to the ups and downs of the investments you choose. You can adjust your premium payments and death benefit. However, this increased flexibility comes with risks. If your investment choices don’t pan out the way you’d hoped, you could end up owing money or even losing the coverage.
» MORE: Types of life insurance
Other permanent policies
There are more specific types of permanent life such as survivorship policies, which are a form of family life insurance. These policies insure two lives at once — typically spouses — and pay out when the second person dies.
If you’re looking at permanent life insurance for retirement or investment goals, discuss it along with other options with a fee-based life insurance advisor before making a decision.
Permanent vs. term life insurance
For most people, term life insurance is more than adequate and affordable. Permanent life insurance policies are best for those who want lifelong coverage combined with the opportunity for cash growth.
Which one you choose will depend on your priorities and the type of insurance best suited to meet both your anticipated and current needs.
Permanent life insurance cost
The cost of permanent life insurance can vary significantly among policy types. These average rates reflect a $500,000 whole life policy for applicants in good health.
Average annual whole life insurance rates for nonsmokers
| Age | Average annual rates for men | Average annual rates for women |
|---|---|---|
| 20 | $2,933 | $2,635 |
| 30 | $4,013 | $3,693 |
| 40 | $5,853 | $5,298 |
| 50 | $8,785 | $7,850 |
| 60 | $14,183 | $12,288 |
| 70 | $25,153 | $20,973 |
| Source: Legacy Funding. Lowest three rates for each age averaged. Data valid as of October 1, 2025. | ||
Average annual whole life insurance rates for smokers
| Age | Average annual rates for men | Average annual rates for women |
|---|---|---|
| 20 | $3,880 | $3,463 |
| 30 | $5,743 | $5,225 |
| 40 | $8,550 | $7,820 |
| 50 | $13,038 | $11,870 |
| 60 | $21,803 | $18,983 |
| 70 | $38,218 | $33,075 |
| Source: Legacy Funding. Lowest three rates for each age averaged. Data valid as of October 1, 2025. | ||
Term life insurance cost
Term life insurance is often more affordable than permanent life insurance because it's temporary and doesn't build cash value. These are the average annual rates for a $500,000, 20-year term life policy for smokers and non-smokers.
Average annual term life insurance rates for nonsmokers
| Age | Average annual rates for men | Average annual rates for women |
|---|---|---|
| 20 | $213 | $176 |
| 30 | $215 | $185 |
| 40 | $331 | $280 |
| 50 | $815 | $640 |
| 60 | $2,351 | $1,650 |
| 70 | $9,702 | $7,994 |
| Source: Policygenius. Lowest three rates for each age averaged. Data valid as of September 10, 2025, and rates are subject to change. | ||
Average annual term life insurance rates for smokers
| Age | Average annual rates for men | Average annual rates for women |
|---|---|---|
| 20 | $760 | $586 |
| 30 | $795 | $658 |
| 40 | $1,489 | $1,187 |
| 50 | $3,531 | $2,560 |
| 60 | $8,611 | $6,112 |
| 65+ | $13,358 | $9,969 |
| Source: Policygenius. Lowest three rates for each age averaged. Data valid as of September 10, 2025, and rates are subject to change. | ||
Permanent life insurance pros and cons
Pros
Coverage typically lasts your entire life.
You can tap into the policy’s cash value while you’re still alive.
With variable life insurance, you can combine cash value growth and the death benefit, increasing the payout when you die.
Cons
Permanent policies cost significantly more than term life policies.
Universal and variable policies require careful monitoring to ensure the cash value performs well and the policy stays in force, making them riskier than term life policies.
If you borrow from the cash value and don’t pay it back, the insurer typically reduces the death benefit by the same amount.
Is permanent life insurance worth it?
Longevity, cost and flexibility are just a few of the factors to consider when shopping for permanent life insurance. Permanent policies may be worth it for people who:
- Need coverage no matter when they die.
- Want to use life insurance to leave an inheritance.
Permanent life insurance is typically more expensive than term life insurance because of the lifelong coverage and investment opportunities. And remember, certain policies require detailed investment attention, something you may not have the time or inclination to give.
