What is whole life insurance?
Whole life insurance is a type of permanent life insurance that lasts your entire life and includes a cash value component that you can access while you’re alive. There are many types of whole life insurance, but traditional whole life is the most common.
How does whole life insurance work?
Like all life insurance products, whole life insurance pays a tax-free death benefit to your beneficiaries upon your death. Three other features of a whole life insurance policy include:
It doesn’t expire: Because it’s a type of permanent life insurance, whole life insurance lasts your entire life.
It builds long-term cash value: Whole life also has a cash value component that accumulates value over time based on a guaranteed minimum interest rate set by your insurance company. The cash value can be accessed while you’re still alive.
It may pay dividends: Some traditional whole life policies are dividend-paying, meaning they pay an annual bonus to policyholders if the insurance company over-performs financially.
Who is a whole life insurance policy best for?
A traditional whole life policy is best for people who have long-term financial obligations or high-net-worth individuals.
People with long-term financial obligations
If you have financial obligations that will last longer than 20 to 30 years — for example, lifelong dependent children or if you expect to care for aging parents — having a permanent death benefit can ensure they'll be cared for whether you're living or not.
High-net-worth individuals
High earners or people with large estates can benefit from whole life insurance. If you’re already maxing out traditional investment accounts like a 401(k) or IRA, whole life insurance can offer an additional investment vehicle. Whole life insurance can also be used as a buffer against estate tax, if your estate falls in the qualifying bracket.
How much does whole life insurance cost?
Rates for a whole life policy with a $500,000 coverage amount could range from $350 to $1,500 per month or more based on your age, gender, health, and policy choices. A Policygenius agent can help you tailor a whole life policy to your budget.
Average monthly whole life insurance rates by age and gender
Age | Sex | $250,000 coverage amount | $500,000 coverage amount | $1 million coverage amount |
25 | Female | $180 | $356 | $697 |
Male | $209 | $413 | $810 | |
35 | Female | $251 | $498 | $981 |
Male | $309 | $612 | $1,210 | |
45 | Female | $389 | $773 | $1,532 |
Male | $478 | $952 | $1,858 | |
55 | Female | $635 | $1,266 | $2,517 |
Male | $775 | $1,545 | $3,038 |
Methodology: Rates are calculated for male and female non-smokers in a Standard health classification, obtaining a $250,000, $500,000, and $1,000,000 whole life insurance policy fully paid up at age 100 from MassMutual. Individual rates will vary as specific circumstances will affect each customer's rate. Rate illustration valid as of 02/01/2023.
How to buy whole life insurance with Policygenius
An insurance expert from Policygenius can help you choose the best whole life insurance policy for your needs and budget. We offer multiple whole life policies from top insurers including MassMutual, Prudential, Mutual of Omaha, and AIG:
Best whole life insurance companies of December 2022
The top whole life insurance companies for you will be the ones that offer the coverage and policy features you need and premium prices you can afford. While a Policygenius agent can help you choose the best whole life policy for your needs, this is the best traditional whole life policy in our marketplace for most people:
Best whole life insurance for most people
2024 Policygenius award winner
MassMutual
4.9
All 50 states
Why we chose it
MassMutual’s whole life insurance plan provides a lifetime coverage option that builds cash value with the potential to earn dividends.
Pros and cons
Pros
Strong financial stability ratings
Higher potential for dividends for whole life policyholders than many competitors
Good customer satisfaction ratings
Cons
High term life premiums
Term life not available through Policygenius
Why we picked it
This A++ rated mutual life insurance company pays higher dividends to its cash value policyholders than some of its competitors. The company has high customer experience ratings compared to other insurers on the Policygenius marketplace and consistently receives high third-party financial stability ratings, which is especially important when purchasing a permanent policy.
Alternatives to whole life insurance
The three most common alternatives to traditional whole life insurance are term life insurance, guaranteed universal life insurance, and guaranteed issue whole life insurance.
Term life insurance
If you don’t need life-long coverage, term life insurance is likely the best life insurance product for you, especially because it’s affordable: whole life costs five to 15 times more than term life insurance. You purchase a policy for a set term — usually 10 to 40 years — and pay premiums during that term.
Once the term expires, so does your coverage (though there is often a possibility to convert a term policy to a permanent policy if you still need protection). Policygenius offers term life coverage from top insurers including AIG, Banner Life, William Penn, Brighthouse Financial, Foresters Financial, Lincoln Financial, Pacific Life, Protective Life, Prudential, Symetra, and Transamerica.
Guaranteed universal life insurance
If you need life-long insurance coverage but don’t anticipate needing the cash value component, guaranteed universal life insurance may be a good option. It has fixed premiums, a small cash value component, and is often the most cost-effective permanent life insurance policy available to most people.
Policygenius offers guaranteed universal policies from top insurers including AIG, Pacific Life, Protective Life, and Prudential.
Guaranteed issue whole life insurance
Guaranteed issue whole life is a type of final expense insurance, also known as burial insurance, that is meant to cover the costs of a funeral and other final expenses. It offers near-certain approval, doesn’t require a medical exam, and coverage limits generally max out at $25,000.
Coverage is expensive — a $25,000 coverage amount could cost $150 to $500 or more a month — but is often available to people who don’t qualify for traditional policies. Policygenius offers final expense whole life policies from Mutual of Omaha and AIG.
Policy type | Coverage length | Available coverage amount | Cash value | Medical exam required |
Whole life | Permanent | $100,000 to $10 million+ | Yes | Yes |
Term life | 10 to 40 years | $100,000 to $10 million+ | No | Not always |
Guaranteed universal life | Permanent | $100,000 to $10 million+ | Yes, but minimal | Yes |
Guaranteed issue whole life | Permanent | $5,000 to $25,000 | Some policies | No |
A Policygenius agent can help you choose which life insurance type is best for you — and help you apply for and buy coverage through the Policygenius insurance marketplace.
Frequently asked questions
Is whole life insurance a good investment?
Traditional investment accounts typically offer higher returns and more flexibility than whole life insurance policies.
What is the minimum amount of whole life insurance you should buy?
The minimum amount of life insurance coverage you should buy will depend on your personal financial situation and your budget. Typically, $50,000 is the minimum available for traditional whole life policies, while other types of policies, like guaranteed issue life insurance, can provide as little as $2,000 in coverage.
Does whole life insurance always pay out?
Whole life insurance policies provide a payout to your beneficiary if you die while the policy is active. This is true except for a few exclusions, such as instances of insurance fraud or suicide during the first two years a policy is active.
Can you cash out a whole life insurance policy?
You can withdraw or take a loan from the cash value of your whole life insurance policy. You can also cancel your policy and take the cash surrender value — which is your cash value minus any surrender fees.
How much does a $1 million whole life insurance policy cost?
A $1 million whole life insurance policy can cost between $545 and $3,556 per month, depending on your age, gender, health profile, and lifestyle habits. In general, the younger and healthier you are, the less you’ll pay for life insurance.
What is modified whole life insurance?
Modified whole life is a type of permanent life insurance that comes with lower premiums for the first few years your policy is active. After the introductory period, you’ll make higher payments for the rest of the policy’s lifetime.
