Permanent life insurance is life insurance that never expires, as long as you pay the premiums. Unlike term life insurance, it includes a cash value account that grows tax-deferred, and you can borrow against or withdraw from that account while you're alive. The main types are whole life, universal life, variable life and final expense insurance.
What Is Permanent Life Insurance?
Permanent life insurance lasts your entire lifetime and includes a savings component (cash value) 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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Updated: August 22, 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 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 | |
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.
How Does Permanent Life Insurance Work?
Every time you make a payment, called a premium, part of it covers the cost of the insurance itself, and the rest goes into the cash value account, where it 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 include these two features regardless of type:
- The death benefit is the money paid out when you die. It goes to your beneficiaries, the people you've named to receive it, and it's paid income tax-free.
- The cash value grows tax-deferred, so you won't owe taxes on growth until you access the funds.
Premium structure varies by policy type. Whole life premiums are fixed at purchase and won't change with age or health. Some universal life policies allow adjustments within limits.
Tax treatment varies by individual circumstances. Talk to a tax professional about your situation.
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 is the most predictable type of permanent life coverage: premiums are fixed, and both the cash value growth rate and death benefit are guaranteed.
People who buy whole life through a mutual insurer, a company owned by policyholders rather than shareholders, may also earn dividends. Dividends aren't guaranteed, but insurers that pay them usually let you take the money as cash or put it toward lowering your premium. Some also let you use it to buy extra coverage.
Guaranteed Acceptance Life InsuranceGuaranteed 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 the death benefit is 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 at a rate set by the insurer and varies by policy subtype.
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 term insurance extended to a set age than a cash-accumulation policy.
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 more investment risk than other permanent policy types, in exchange for higher potential growth. 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, so older adults and people with health conditions who might not qualify for standard permanent coverage can often still get one.
SURVIVORSHIP LIFE INSURANCE
Insurance companies also offer survivorship life insurance, which can be in the form of permanent coverage. This type of policy is also called second-to-die insurance, as it covers two people under one policy and pays the death benefit after the second insured dies. Couples often use it for estate planning, since the payout can help cover estate taxes or other costs that come due after both spouses have passed.
What Riders Are Available on Permanent Life Insurance?
You can customize a permanent life insurance policy with optional add-ons called riders. Availability and terms vary by insurer, but these three are common:
- Waiver of premium. If you become disabled and can't work, this rider waives your premium payments so the policy stays in force.
- Accelerated death benefit. This rider lets you access part of the death benefit while you're alive if you're diagnosed with a terminal or chronic illness.
- Guaranteed insurability. This rider lets you increase your coverage at set future dates without a new medical exam, which locks in insurability even if your health changes later.
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 with 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 | Female | $310 | $568 |
Male | $364 | $664 | |
30 | Female | $399 | $733 |
Male | $444 | $811 | |
35 | Female | $490 | $896 |
Male | $545 | $992 | |
40 | Female | $605 | $1,103 |
Male | $667 | $1,216 | |
45 | Female | $767 | $1,396 |
Male | $856 | $1,557 | |
50 | Female | $1,025 | $1,863 |
Male | $1,146 | $2,085 | |
55 | Female | $1,322 | $2,404 |
Male | $1,505 | $2,736 | |
60 | Female | $1,738 | $3,157 |
Male | $2,052 | $3,728 |
Universal Life Insurance Rates by Age
25 | Female | $151 | $277 |
Male | $171 | $312 | |
30 | Female | $184 | $338 |
Male | $203 | $370 | |
35 | Female | $216 | $395 |
Male | $241 | $439 | |
40 | Female | $254 | $463 |
Male | $294 | $536 | |
45 | Female | $312 | $567 |
Male | $355 | $646 | |
50 | Female | $393 | $714 |
Male | $448 | $815 | |
55 | Female | $493 | $897 |
Male | $566 | $1,028 | |
60 | Female | $627 | $1,140 |
Male | $736 | $1,336 |
These rates are based on quotes for MoneyGeek's sample profile. Actual premiums may vary based on the insurer, policy type, coverage level and your health profile. Get personalized quotes from insurers for accurate costs.
How Do You Access Cash Value in a Permanent Life Insurance Policy?
Permanent life insurance policyholders can access accumulated cash value in four ways, and each comes with different tradeoffs for the death benefit and taxes.
- Withdrawal. You take cash directly from the policy's cash value. Withdrawals that don't exceed the total premiums you've paid aren't taxed; amounts above that may trigger a tax liability. Withdrawals also reduce the death benefit unless you repay them.
- Loan. You borrow against the cash value instead of withdrawing it, and the loan accrues interest set by the policy contract. A loan doesn't require a credit check, but an unpaid balance at your death reduces the payout to your beneficiaries.
- Surrender. You cancel the policy entirely and receive the accumulated cash value minus any surrender charges the insurer applies. Surrendering ends your coverage permanently, so your beneficiaries no longer receive a death benefit. Surrender charges are usually highest in a policy's early years and decrease over time.
- Premium offset. Once the cash value has built up enough, you can use it to cover part or all of future premium payments instead of paying out of pocket. This option can make it easier to keep a policy in force if your income drops, such as after retirement, though relying on cash value to pay premiums slows further cash value growth.
Tax treatment for withdrawals, loans and surrenders varies by individual circumstances. Talk to a tax professional about your situation.
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
Cons of Permanent Life Insurance
- Coverage stays in force for life as long as premiums are paid.
- Cash value grows tax-deferred; you can borrow against it or make withdrawals while you're alive.
- Beneficiaries receive the death benefit income tax-free.
- Premiums are fixed at purchase. Age and health changes don't affect them afterward.
- Higher premiums than term life for the same death benefit.
- Internal fees on some policies reduce cash value growth, particularly in the early years.
- A lapsed policy ends coverage; any accumulated value may not be recoverable.
- Cash value growth can fall short of returns from stocks, bonds or other market investments.
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 is the better fit 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.
Business owners who use permanent life insurance to fund a buy-sell agreement or insure a key employee.
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 a policy type to your goals and budget.
Permanent Life Insurance: FAQ
Yes. Withdrawals reduce the death benefit unless you repay the amount taken out. Withdrawing more than you've paid in premiums may also trigger a tax liability. If you want to access cash value without reducing the death benefit, borrowing against the policy is a separate option, though unpaid loan balances accrue interest and reduce the payout to beneficiaries at death.
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 get life insurance depends on your financial obligations and goals.
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.
Permanent life insurance costs more than term life insurance for the same death benefit. Some policies carry high internal fees that slow cash value growth, especially in the early years. A lapsed policy from missed premiums or insufficient cash value ends your coverage and can wipe out the value you've built up. Cash value growth also lags behind returns available through other investment options.
For most buyers, term life insurance is the better choice: it costs less for the same death benefit and matches coverage to a specific need, like a mortgage or the years until children are grown. Permanent life insurance is the better fit when you have lifelong financial obligations, such as estate planning, or want tax-deferred cash value growth alongside your coverage.
No, permanent life insurance is a regulated financial product, not a scam. The skepticism people raise usually points to two drawbacks: a portion of the first year's premium goes toward the agent's commission rather than cash value, and internal fees can slow cash value growth in a policy's early years. These tradeoffs make permanent life insurance a poor fit for buyers who mainly want affordable income-replacement coverage, where term life is often the better option. Permanent life insurance still fits buyers with lifelong obligations, estate planning goals or maxed-out retirement accounts.
Critics compare a whole life policy's cash value growth to other investments and often find it slower, especially in the first several years, when much of each premium covers insurance costs and fees rather than building cash value. Whole life insurance isn't built to be an investment first: it guarantees a death benefit and a fixed rate of cash value growth. A taxable brokerage account or retirement account often grows faster for someone focused purely on investment returns. Whole life still fits buyers who want guaranteed lifelong coverage and tax-deferred growth built into the same policy.
Best Permanent Life Insurance Pages
About Mark Fitzpatrick
Mark Fitzpatrick, a licensed Property and Casualty (P&C) Insurance Producer in Connecticut, is MoneyGeek's resident expert in insurance and economics. He has spent nearly a decade covering the insurance market at LendingTree and MoneyGeek, analyzing hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.
His work has appeared in The Washington Post, The New York Times and NPR. He draws on independent cost and consumer experience data, and no insurance company partnerships affect his recommendations.
Mark studied at Boston College and later earned a master's in economics and international relations from Johns Hopkins University. He worked in financial risk management at State Street before joining MoneyGeek. He's also a five-time “Jeopardy!” champion.