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Why are whole life insurance rates more expensive?

Whole life insurance rates are typically more than term policy rates because of added financial benefits and the fact that it is a permanent* policy meant to remain in force until you die.

Whole life insurance is designed to last you your whole life. This coupled with the added component of having the potential to accumulate cash value over time, is generally what makes whole life more expensive than other types of life insurance. And if you’re willing to pay more, you might find these features worth the extra dollars.

How whole life insurance works

When you pay your whole life premiums, part of your payment goes toward insurance costs, while another portion goes into a cash value component of your policy that begins growing at an established interest rate. This feature of whole life insurance accounts for the some of the price difference compared to a term policy. 

Another factor in why whole life policies can be pricier, is the simple fact that they offer coverage that is meant to be with you for the rest of your life. For this reason, insurers figure that there is a greater likelihood of paying out a death claim at some point on a whole life policy, compared to a term life policy.

There are many factors that go into setting life insurance premium rates and every insurance company has their own set of life insurance products, underwriting guidelines, and policy fees. Before you make a decision on whether or not whole life is right for you, make sure that the cash value and permanence of the policy justify the higher premiums may be paying. Consult with an insurance professional or company representative who can explain the benefits and features of various life insurance products so that you can select the policy that best meets your individual needs.

For more information on whole life and other permanent life insurance policies, visit the Protective Learning Center. 

* As long as required premium payments are timely made.



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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective or its subsidiaries.

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