How It Works

• Each premium payment covers the cost of insurance and funds the cash value account.
  
  
• The cash value earns interest at a guaranteed minimum rate.
  
  
• You can access the cash value through policy loans or withdrawals while you’re alive.
  
  
• When you pass away, your beneficiaries receive the death benefit (minus any outstanding loans).

Advantages

• Lifetime protection – never expires if premiums are paid.
  
  
• Guaranteed growth of cash value.
  
  
• Level premiums that don’t increase with age.
  
  
• Ability to borrow from your policy without credit checks.

Drawbacks

• More expensive than term life for the same death benefit.
  
  
• Loan interest and unpaid loans reduce the death benefit.
  
  
• Lower returns on cash value compared to other investments.

Best For

• People who want lifelong coverage and predictable premiums.
  
  
• Those who want to combine life insurance with a low-risk savings component.
  
  
• Estate planning and leaving a guaranteed inheritance.

Policy Cost

Average Costs by Age (Preferred Nonsmoker, $500K, 20-Year Term):

• 20s: ~$214/year (men); ~$177/year (women)
• 30s: ~$215/year (men); ~$185/year (women)
• 40s: ~$332/year (men); ~$280/year (women)
• 50s: ~$815/year (men); ~$640/year (women)

• A $500,000 whole life policy typically costs:
  
• Age 30: ~ $4,311/year (men), ~ $3,959/year (women)
  
• Age 40: ~ $6,387/year (men), ~ $5,860/year (women)
  
• Age 50: ~ $10,069/year (men), ~ $9,037/year (women)
  
  
• Another example:
  
• Monthly premiums for men: $169 (age 20), $238 (30), $355 (40), $543 (50)
  
• Women: $146, $206, $296, and $462 respectively
  
  
• For lower coverage (around $20K):
  
• Monthly cost: ~$21 for females and $23 for males at age 40
  
  
• A 30-year-old man may pay about $472/month (~$5,664/year) for a $500,000 whole life policy
  

Best Age to Buy

• 20s and 30s are the most cost-effective time to purchase. Healthier status and lower premiums make it ideal.
  
  
• Many adults overestimate cost—people aged 18–30 believe life insurance costs 10–12 times more than it actually does
  Choice Mutual.

Underwriting and Other Pricing Factors

Pricing depends on:

• Age, gender, and health status (“Preferred” vs. “Standard” risk classes).
  
  
• Smoking status (smokers face much higher rates).
  
  
• Policy type—whole life is 5–15 times more expensive due to lifetime coverage and cash value.
  
  
• Terms of coverage (term length vs lifetime), optional riders, and state of residence can influence cost.