Permanent Life Insurance Calculator
Compare permanent insurance rates across over 20 companies. Determine whether universal or whole life insurance is worth the cost compared to the more affordable term life insurance.
What Is Permanent Life Insurance?
Permanent life insurance is a type of policy that provides coverage for the insured’s entire life, as long as premiums are paid. Unlike term life insurance, which expires after a set number of years, permanent life insurance also accumulates cash value, which can be accessed while the policyholder is alive.
Helpful Tip: Permanent coverage is a lifelong financial asset. You need a carrier that will still be highly profitable 50 years from now to pay your death benefit. Stick exclusively to the best life insurance companies for permanent policies.
How Does Permanent Life Insurance Work?
- Lifelong Coverage – The policy remains in force as long as premiums are paid.
- Cash Value Growth – A portion of each premium payment goes toward a savings component, which grows tax-deferred.
- Death Benefit – Provides a payout to beneficiaries upon the insured’s death.
- Flexible Options – Some types allow adjustments to premiums, death benefits, and cash value use.
Key Features of Permanent Life Insurance
✔ Lifetime Coverage – No expiration, unlike term life insurance
✔ Cash Value Accumulation – Can be borrowed against or withdrawn
✔ Premium Flexibility – Some policies allow adjustments
✔ Investment Growth – Some policies provide market-linked returns
Pros and Cons of Permanent Life Insurance
Pros
✔ Guaranteed death benefit
✔ Cash value accumulation with tax advantages
✔ Can be used for loans, withdrawals, or premium payments
✔ No need to renew coverage
Cons
✖ High premiums compared to term life
✖ Cash value growth can be slow
✖ Some policies require active management
✖ Fees and surrender charges apply for early withdrawals
Types of Permanent Life Insurance
1. Whole Life Insurance
A traditional form of permanent life insurance with fixed premiums and guaranteed cash value growth.
✔ Pros: Predictable premiums, guaranteed returns
✖ Cons: Higher costs, limited investment flexibility
2. Universal Life Insurance (UL)
Offers flexible premiums and death benefits, with a cash value that grows based on interest rates.
✔ Pros: Adjustable payments, potential for higher returns
✖ Cons: Interest rates can fluctuate, requiring careful monitoring
3. Indexed Universal Life Insurance (IUL)
Ties cash value growth to a stock market index, offering the potential for higher returns with downside protection.
✔ Pros: Higher earning potential, downside risk protection
✖ Cons: Complex structure, caps on returns
4. Variable Life Insurance
Allows policyholders to invest cash value in various sub-accounts, similar to mutual funds.
✔ Pros: High growth potential, investment choices
✖ Cons: Market risks, possible loss of cash value
Permanent Life Insurance Comparison Table
| Feature | Term Life | Whole Life | Universal Life (UL) | Indexed Universal Life (IUL) | Variable Universal Life (VUL) |
|---|---|---|---|---|---|
| Coverage Length | 10–40 years, expires after term | Lifetime (to age 95–121) | Lifetime if funded properly | Lifetime if funded properly | Lifetime if funded properly |
| Premiums | Lowest | High, fixed | Flexible, can adjust | Flexible, can adjust | Flexible, can adjust |
| Cash Value | None | Guaranteed growth | Interest credited by insurer | Growth tied to stock index (with caps & floors) | Invested in subaccounts (market-based) |
| Risk/Return | No risk; no growth | Low risk, modest growth | Low–moderate risk | Moderate risk, capped upside | High risk, market exposure |
| Best For | Income replacement, temporary needs | Estate planning, lifelong dependents | Flexible long-term coverage | Growth with downside protection | Investors wanting market exposure |
| Death Benefit | People want growth + protection | Guaranteed for life | Adjustable | Adjustable | Adjustable |
| Pros | Cheapest way to protect income | Strong guarantees, predictable | Flexible premiums & benefits | Growth potential with downside protection | Highest growth potential |
| Cons | Expires with no value | Expensive, less flexible | Sensitive to funding levels | Caps limit upside; insurer controls rates | High fees, market volatility |
| Who Benefits Most | Families with temporary needs (mortgage, raising kids) | High-net-worth families, estate planning, legacy goals | Those wanting lifetime coverage with flexibility | Experienced investors are comfortable with risk | Conservative savers, those avoiding high fees |
| Who Should Avoid | Anyone needing lifelong coverage | Budget-conscious buyers | Those unwilling to monitor funding | Those expecting unlimited market growth | Conservative savers; those avoiding high fees |
How Much Does Permanent Life Insurance Cost?
Premiums are significantly higher than term life insurance due to lifelong coverage and cash value growth. Costs depend on:
- Age and health
- Coverage amount
- Type of policy
- Investment performance (for variable and indexed policies)
Is Permanent Life Insurance Worth It?
Who Needs It?
✔ High-net-worth individuals seeking tax advantages
✔ People who want guaranteed lifetime coverage
✔ Those looking to supplement retirement savings
Who Doesn’t Need It?
✖ Young individuals needing temporary coverage
✖ Those looking for low-cost protection
✖ People who don’t need cash value accumulation
Money-Saving Tips for Permanent Life Insurance
Permanent life insurance is one of the most expensive forms of coverage, but there are ways to reduce costs without sacrificing protection:
- Compare multiple insurers – Premiums and cash value crediting vary widely by company. Independent agents can shop multiple carriers on your behalf.
- Buy young – Premiums are locked in based on your age and health. Purchasing in your 20s–30s can save thousands over your lifetime.
- Choose the right type – Whole life offers strong guarantees but costs more; indexed universal life may offer more growth potential at lower initial costs.
- Avoid unnecessary riders – Extra features like accidental death or waiver riders increase premiums; only add what you truly need.
- Fund correctly – Underfunding a universal life policy can cause it to lapse. Overfunding within IRS guidelines may maximize tax-advantaged growth.
- Consider a blend – Some households mix term life (for income replacement) with smaller permanent coverage (for lifelong needs like estate planning).
- Review regularly – Work with an insurance agent to adjust your policy as interest rates, health, or financial goals change.
Final Thoughts: Should You Buy Permanent Life Insurance?
Permanent life insurance is best for those who need lifelong coverage and want to build cash value. However, it is expensive and requires a long-term commitment. If you need coverage primarily for income replacement, term life insurance is a more cost-effective option.
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Questions From Our Readers
Why is permanent life insurance bad?
It’s not inherently bad, but it might not be suitable for everyone due to its higher cost and, in some cases, the investment risk involved with certain types of policies.
What is the cash value of permanent life insurance?
The savings portion of the policy grows over time, allowing policyholders to build cash that can be borrowed against or withdrawn, usually on a tax-deferred basis.
Is permanent life insurance a good investment?
Permanent life insurance can work as an investment, but it’s not always the best option compared to other alternatives like IRAs or 401(k)s. The biggest advantage is tax-deferred growth and protection against market losses (in some policies). However, fees and slow growth can reduce overall returns.
Does permanent life insurance have cash value?
Yes, permanent life insurance builds cash value over time that you can access for various purposes. You can take policy loans, make withdrawals, use it to pay premiums, or supplement your retirement income when needed.
What is the best age to get permanent life insurance?
The younger you buy, the cheaper your locked-in premiums will be. Most people benefit from purchasing in their 20s to 40s.
What happens when a permanent life insurance policy matures?
At maturity (often age 95–121), the insurer pays out the cash value or death benefit, ending the policy.
Can I cash out a permanent life insurance policy?
Yes. You can surrender the policy for its cash value, but surrender charges and taxes on gains may apply.
Do you have to pay taxes on a life insurance policy payout?
Death benefits are generally income-tax-free. Cash value withdrawals may be taxable if they exceed your basis.
How long do you have to have life insurance before it pays out?
Most policies pay immediately, but if death occurs within the first two years, the insurer may investigate for fraud or misrepresentation.
How much will I receive if I surrender my life insurance policy?
You receive the accumulated cash value minus surrender charges and any outstanding loans.
What are the disadvantages of permanent life insurance?
High cost, complexity, and lower investment returns compared to pure investments.