What Is Permanent Life Insurance?

Permanent life insurance lasts your entire lifetime and includes a cash value component that grows tax-deferred, as long as you pay premiums.

Find out what permanent life insurance is and if it's right for you.

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Written by Mark Fitzpatrick

Updated: March 5, 2026

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Key Takeaways

Unlike term life insurance, which expires after a set period with no savings element, permanent policies combine a guaranteed death benefit with a built-in account.

You can borrow against or withdraw from the cash value of a permanent life insurance policy while you're alive.

Whole life, universal life, variable life and final expense insurance are the main types. Each differs in how cash value grows and how much premium flexibility the policy allows.

What Is Permanent Life Insurance and How Does It Work?

Permanent life insurance combines a death benefit with a cash value account that grows tax-deferred over time. When you pay a premium, a portion covers the cost of the insurance, and a portion goes into the cash value account that grows based on the policy type.

You can borrow against the cash value or make withdrawals during your lifetime. Doing so reduces the death benefit if the funds aren't repaid. If the policy lapses because of insufficient cash value or missed premiums, coverage ends, and you may lose accumulated value.

Key Features

All permanent life policies share three core features:

The death benefit pays your beneficiaries income tax-free.
The cash value grows tax-deferred, so you won't owe taxes on growth until you access the funds.
Whole life premiums lock in at purchase and don't change with age or health. Some universal life policies allow premium adjustments.

Tax treatment varies by individual circumstances. Talk to a tax professional about your situation.

Permanent Life Insurance vs. Term Life Insurance

Permanent and term life insurance differ on three points: how long coverage lasts, whether the policy builds cash value and what you pay in premiums. Term life covers you for a set period and pays out only if you die during that term. Term life costs less than permanent coverage for the same death benefit but builds no cash value and expires when the term ends.


Coverage length	Lifelong	10 to 30 years; some companies offer up to 40 years
Cash value	Yes	No
Premiums	Higher	Lower
Death benefit guarantee	Varies by type	Yes

Many term life policies include a conversion option that lets you switch to a permanent policy without a new medical exam. Conversion deadlines and eligible products vary by insurer.

Types of Permanent Life Insurance

The main types of permanent life insurance differ in how cash value grows and how much premium flexibility they offer.

Whole Life Insurance

Whole life insurance offers fixed premiums, a guaranteed minimum cash value growth rate and a guaranteed death benefit, making it the most predictable type of permanent life coverage. People who buy whole life through a mutual insurer may also earn dividends, which can be taken as cash, used to reduce premiums, or applied to buy additional coverage. Dividends aren't guaranteed.

Guaranteed Acceptance Life Insurance

Guaranteed acceptance life insurance approves applicants regardless of health. You don't need to go through a medical exam or answer health questions. It's a whole life policy, so coverage is lifelong and cash value accumulates over time, but death benefits are smaller than standard whole life coverage.

Most guaranteed acceptance policies include a graded death benefit period, often two years, during which the full death benefit isn't paid for non-accidental death. If the insured dies during this period, beneficiaries receive a return of premiums paid, sometimes with interest, rather than the full death benefit. Premiums are higher per dollar of coverage than standard whole life because the insurer accepts all applicants without health screening.

Universal Life Insurance

Universal life insurance provides flexible premiums and an adjustable death benefit. With this coverage type, your premium payments are split between the cost of insurance, which covers the life insurance portion, and the cash value component, which is deposited into an account that earns interest based on the insurance company's investment strategy.

There are three subtypes of universal life, and they differ in how the cash value grows.

Guaranteed universal life (GUL): Fixed premiums with minimal cash value accumulation and a guaranteed death benefit that stays in force to a specified age, often 90, 95 or 121. It functions more like a

Indexed universal life (IUL): Cash value growth tied to a market index such as the S&P 500. Most IUL policies include a floor rate, often 0%, so cash value won't decrease due to negative index performance, though gains are also capped.

Variable universal life (VUL): Cash value invested in subaccounts that the policyholder chooses, similar to mutual funds. VUL carries the highest risk and highest growth potential among permanent policy types. Cash value can decrease if investments perform poorly.

Variable Life Insurance

Variable life insurance has fixed premiums and invests cash value in subaccounts you choose, such as stock, bond or money market funds. The death benefit includes a guaranteed minimum, so it won't fall below a set floor even if investments perform poorly. But it can increase if the subaccounts perform well.

Cash value doesn't have the same guarantee and can decrease with poor investment performance. Variable life differs from variable universal life in one key way: premiums and the guaranteed minimum death benefit are fixed, while variable universal life lets you adjust both. Because variable life involves investment risk, it's regulated as a security and must be sold by a licensed broker-dealer.

Final Expense Insurance

Final expense insurance, also called burial insurance, is a small permanent life policy with death benefits often ranging from $5,000 to $25,000. Final expense policies cover funeral costs and other end-of-life expenses. These policies don't require a medical exam, making them accessible to older adults or people with health conditions who may not qualify for standard permanent coverage.

How Much Does Permanent Life Insurance Cost?

Premiums for permanent coverage depend on your age, health, gender, tobacco use, the policy type and the death benefit amount. Insurers set life insurance rates at the time of purchase and don't increase as you age, so buying earlier locks in a lower rate for life.

The tables below show average monthly premiums for $500,000 whole and universal life policies by age, per MoneyGeek's analysis of major insurers.

Whole Life Insurance Rates by Age


25	$310 (F), $364 (M)	$568 (F), $664 (M)
30	$399 (F), $444 (M)	$733 (F), $811 (M)
35	$490 (F), $545 (M)	$896 (F), $992 (M)
40	$605 (F), $667 (M)	$1,103 (F), $1,216 (M)
45	$767 (F), $856 (M)	$1,396 (F), $1,557 (M)
50	$1,025 (F), $1,146 (M)	$1,863 (F), $2,085 (M)
55	$1,322 (F), $1,505 (M)	$2,404 (F), $2,736 (M)
60	$1,738 (F), $2,052 (M)	$3,157 (F), $3,728 (M)

Universal Life Insurance Rates by Age


25	$151 (F), $171 (M)	$277 (F), $312 (M)
30	$184 (F), $203 (M)	$338 (F), $370 (M)
35	$216 (F), $241 (M)	$395 (F), $439 (M)
40	$254 (F), $294 (M)	$463 (F), $536 (M)
45	$312 (F), $355 (M)	$567 (F), $646 (M)
50	$393 (F), $448 (M)	$714 (F), $815 (M)
55	$493 (F), $566 (M)	$897 (F), $1,028 (M)
60	$627 (F), $736 (M)	$1,140 (F), $1,336 (M)

These rates are based on quotes for MoneyGeek's sample profile. Actual premiums may vary based on the insurer, policy type, coverage level, insurance company and your health profile. Get personalized quotes from insurers for accurate costs.

Permanent Life Insurance Pros and Cons

Permanent life insurance offers benefits that term coverage doesn't, but those benefits come at a higher cost and with added complexity. Weigh both sides to see whether the long-term value of lifelong coverage and cash value growth justifies the premium difference for your situation.

Pros and Cons

Pros of Permanent Life Insurance

Lifelong coverage that doesn't expire as long as you pay premiums
Cash value grows tax-deferred and can be accessed through loans or withdrawals while you're alive
Death benefit paid to beneficiaries is income tax-free under IRS rules
Premiums lock in at purchase and don't go up with age or health changes

Cons of Permanent Life Insurance

Premiums run higher than term life for the same death benefit
Some policies carry high internal fees that slow cash value growth
A lapsed policy (from missed premiums or insufficient cash value) ends coverage and can wipe out accumulated value
Cash value growth rates can trail returns available through other investment vehicles

Should You Buy Permanent Life Insurance?

Permanent life insurance fits best when you have lifelong financial obligations or complex estate planning needs. For buyers focused primarily on income replacement at an affordable premium, term life is the better choice.

Permanent coverage might be right for:

People who have maxed out contributions to 401(k)s, IRAs and other tax-advantaged accounts and want an additional vehicle for tax-deferred growth

People with lifelong dependents, such as a child with special needs, who require a death benefit regardless of when the insured dies

High-net-worth people using life insurance as part of an estate planning strategy

People who have outlived their term coverage and still need a death benefit

People who want to guarantee funds for final expenses, regardless of when they die

What Is Permanent Life Insurance: Bottom Line

Permanent life insurance gives you lifelong coverage and tax-deferred cash value growth that term life doesn't include. It costs more and suits a narrower set of situations. If you don't have complex estate planning needs or maxed-out retirement accounts, compare term life options first. A licensed life insurance agent or financial advisor can match the right policy type to your goals and budget.

Permanent Life Insurance: FAQ

We've answered common questions about permanent life insurance.

Can I withdraw money from permanent life insurance?

Yes, but withdrawals reduce the death benefit if not repaid. Loans accrue interest, and an unpaid loan balance reduces the payout to beneficiaries. Withdrawing more than you've paid in premiums may trigger a tax liability.

What is the best age to buy permanent life insurance?

Premiums are set at the time of purchase and don't increase with age, so buying younger locks in a lower rate. A 25-year-old female nonsmoker pays an average of $151 per month for a $500,000 universal life policy, compared to $627 per month at age 60, based on MoneyGeek's analysis. The best age to buy life insurance depends on your financial obligations and goals.

Do you get money back from permanent life insurance?

You don't get premiums back directly, but these policies build cash value you can access through loans or withdrawals. If you surrender the policy, you may receive the accumulated cash value minus any surrender charges and outstanding loan balances. Your beneficiaries receive the death benefit when you die.

Best Permanent Life Insurance Pages

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.

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