Whole life insurance is a permanent life insurance policy that covers you for your entire life, as long as you pay your premiums. Unlike term life, it never expires, and your premiums stay the same from the day you buy it. Every policy includes a death benefit paid to your beneficiaries and a cash value account that grows over time. Whole life is one of the most predictable types of life insurance available, with your premium, death benefit and guaranteed growth rate all locked in at purchase.
Is Whole Life Insurance Worth It in 2026?
Whole life insurance offers lifelong coverage and builds cash value but costs much more than term life. Here's how to know if it's worth it for you.
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Updated: February 19, 2026
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What Is Whole Life Insurance?
HOW WHOLE LIFE CASH VALUE WORKS
The cash value in a whole life policy grows at a guaranteed rate set by your insurer, usually between 1% and 3.5% annually. A portion of every premium payment goes into this account, and the growth is tax-deferred. Once you've built up enough cash value, you can borrow against it or surrender the policy for a payout. Some insurers also pay dividends on top of guaranteed growth, though dividends aren't guaranteed. Cash value growth is slow in the early years because a large share of your premium covers the insurer's costs and the cost of insurance itself.
Whole Life vs. Term Life Insurance: What's the Difference?
The core difference comes down to duration and cost. Term life insurance covers you for a set period of 10 to 30 years, then expires. Whole life covers you permanently. A healthy 35-year-old pays $30 to $50 per month for a $500,000 20-year term policy, while a comparable whole life policy runs $400 to $600 per month. Term life has no cash value, but whole life does. For a full side-by-side breakdown, see our term vs. whole life comparison.
Term life is best for pure income replacement and whole life is best for estate planning or legacy goals. The right choice depends on what you need the policy to do.
When Is Whole Life Insurance Worth It?
Whole life makes the most sense in four situations. Outside of these, you’ll get better value from term life combined with separate investments:
- 1
You Have Lifelong Dependents
If you support a child with a disability, a special needs adult or another dependent who will need financial support indefinitely, whole life is worth considering. Term coverage eventually runs out, but your dependent's needs don't. A permanent death benefit guarantees your beneficiary receives a payout no matter when you die. Our guide to best life insurance for children covers additional options for families in this situation.
- 2
You've Maxed Out Your Retirement Accounts
Once you've contributed the maximum to your 401(k) and IRA, whole life cash value offers another tax-deferred savings vehicle. The growth isn't taxed as it builds, and loans taken against cash value are tax-free. This strategy works best for high earners who need additional tax-advantaged savings and can afford the higher premiums without straining their budget. It's an addition to retirement accounts, not a substitute, and it only makes sense once those are fully funded.
- 3
You Want to Leave a Tax-Efficient Legacy
Whole life death benefits pass to beneficiaries income-tax-free, which makes the policy useful for high-net-worth estate planning. Families with large estates sometimes use whole life to cover estate taxes, so heirs don't have to liquidate assets to pay the bill. An irrevocable life insurance trust can keep the death benefit out of your taxable estate entirely.
- 4
You Need Predictable, Guaranteed Coverage
Whole life premiums never increase and coverage never lapses as long as you pay. For buyers who want to lock in a rate permanently, particularly those who buy young and healthy, this predictability has real value. Seniors who want guaranteed coverage without worrying about policy renewal should review our best whole life for seniors guide. If certainty matters more to you than cost, whole life delivers it.
When Whole Life Insurance Isn't Worth It
Whole life isn’t worth it in two common situations:
- 1
You're Focused on Investment Returns
Whole life cash value grows slowly at low guaranteed rates. Investing the premium difference between whole life and term into a diversified index fund will almost always produce better long-term returns. This is the "buy term and invest the rest" argument, and the math supports it. Our guide into whether whole life insurance is a good investment walks through the numbers in detail. If your primary goal is wealth building, there are more efficient tools.
- 2
You Need High Coverage at a Low Cost
A 40-year-old who needs $1 million in coverage to protect a family and mortgage will pay $1,000 or more per month for whole life. The same coverage through a 20-year term policy costs $60 to $80 per month. If your main need is replacing your income while your kids are young or your mortgage is active, term life covers that at a fraction of the cost. Most people in this situation don't need permanent coverage; they need affordable coverage that lasts long enough.
How Much Does Whole Life Insurance Cost?
Whole life premiums depend on your age, health, gender and the coverage amount you choose. A healthy 30-year-old woman pays $180 to $225 per month for $250,000 in whole life coverage. A 50-year-old man in good health will pay $550 to $700 per month for the same amount. Premiums are locked in at purchase, so buying earlier means paying less for the same coverage over your lifetime.
Here is the average cost of a $500,000 whole life insurance policy by age for nonsmokers in average health:
25 | $310 | $364 |
30 | $399 | $444 |
40 | $605 | $667 |
50 | $1,025 | $1,146 |
60 | $1,738 | $2,052 |
70 | $3,306 | $3,874 |
80 | $12,223 | $14,710 |
How to Decide If Whole Life Insurance Is Right for You
Your coverage goal determines which policy fits. If you need income replacement for a defined period, term life costs a fraction of the cost of whole life and covers the same risk. But if you have a lifelong dependent, an estate planning objective or a guaranteed legacy goal, whole life is worth a closer look.
Your budget matters just as much as your coverage goal. Whole life is only worth it if you can commit to the premiums long-term. A lapsed policy means losing years of premiums and cash value. Before buying, use our life insurance calculator to estimate your coverage needs and compare the best whole life insurance companies. A licensed insurance agent or fee-only financial planner can run the numbers for your unique tax situation and estate goals.
Frequently Asked Questions
Can you cash out a whole life insurance policy?
Yes. You can surrender a whole life policy for its cash surrender value, which is the accumulated cash value minus any surrender fees. You can also borrow against your cash value without surrendering the policy. Withdrawals above your basis may be taxable.
Is whole life insurance a good investment compared to a 401(k)?
A 401(k) outperforms whole life as an investment due to higher contribution limits, lower costs and better return potential. Whole life cash value grows slowly at guaranteed rates of 1% to 3.5%. Max out your retirement accounts before considering whole life for additional savings.
What happens to whole life insurance cash value at death?
The cash value doesn't pass to your beneficiaries. When you die, your beneficiaries receive the death benefit only. The insurer keeps the accumulated cash value. Some policies offer a return of cash value rider that adds the cash value to the death benefit, but that rider raises your premium.
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About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. He has analyzed the insurance market for over five years, conducting original research for insurance shoppers. His insights have been featured in CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
He writes about economics and insurance, breaking down complex topics so people know what they're buying.