Permanent vs. Whole Life Insurance: What’s the Difference?

Permanent life insurance provides lifelong coverage and can help loved ones cover expenses and pay off debts after you’ve passed away. It can also offer some additional financial flexibility with the cash value component. Aflac’s whole life insurance, a type of permanent life insurance, can help offer additional peace of mind for individuals and their families, but it’s important to understand how this policy compares to other types of permanent life insurance. Read on to learn more about permanent vs. whole life insurance.

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Key Takeaways

Permanent life insurance is a policy that lasts for the policyholder’s entire life, provided they continue paying premiums.¹
Whole life insurance is a type of permanent life insurance policy with a cash value component that grows tax-deferred and offers a guaranteed death benefit.
Aflac offers whole life insurance that can help provide additional peace of mind that your beneficiaries will have financial support after you pass away.

How permanent life insurance works

Permanent life insurance provides coverage for the policyholder’s entire life. Premiums tend to be higher than term life insurance, which provides coverage for a specific term that often ranges from 10 to 30 years. Permanent life insurance policies pay a death benefit to designated beneficiaries when you pass away. They also have a cash value component that grows over time and allows you to access the policy’s value while you’re still alive.

Types of permanent life insurance policies

There are several types of permanent life insurance that you should be aware of when choosing the right policy for you and your loved ones:

Whole life insurance

Whole life insurance is a permanent life insurance policy with a cash value component that accrues interest on a tax-deferred basis. Part of each premium payment goes toward the policy’s cash value, which you can withdraw or borrow against if you need money later in life.² Additionally, premiums are typically fixed, so they won’t change throughout your lifetime. Aflac offers whole life insurance policies that can offer a guaranteed death benefit and help give you additional peace of mind.

Universal life insurance

Like whole life insurance, universal life insurance has a savings element, but it’s more flexible than a whole life policy. These policies consist of a cost of insurance (COI) amount and a cash value savings component. The COI is the minimum premium payment necessary to keep the policy active. Anything collected in excess grows the cash value of the policy.³ This allows you to adjust your premiums and death benefits based on how much you want to pay each month. Aflac does not offer universal life insurance.

Variable life insurance

Variable life insurance invests the cash value of the policy, typically in mutual funds. This policy functions like any other permanent life insurance policy in that it remains active as long as you pay your premiums. However, it can be riskier because the cash value component is in the stock market, so it may rise or fall in value.⁴ Aflac does not offer variable life insurance policies.

Final expense whole life insurance

Final expense insurance is a policy that pays a smaller death benefit to help family cover end-of-life costs, like a funeral, burial, and any outstanding medical debts.⁵ Aflac offers final expense whole life insurance to help provide additional financial support to family members after you pass.

Differences between permanent life insurance and whole life insurance

Whole life insurance is a form of permanent life insurance, though the two terms are often used interchangeably — which can be misleading. There are a few types of life insurance that fall under the umbrella of permanent life insurance, and whole life insurance is just one of them. Ultimately, whole life insurance is just one form of permanent life insurance, which provides coverage for an individual’s entire lifetime.

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How much do permanent life insurance policies cost?

The cost of permanent life insurance varies significantly depending on the individual. Some of the most important factors include a person’s age, current health, the type of policy, the death benefit, and any riders or features added as customizations to the policy. Two identical policies may not cost the same for two different people. That said, these averages may help you understand the basic costs of life insurance:¹

Policyholder	Average whole life insurance cost for $250,000 of coverage
Female, age 30	$167/month
Female, age 40	$258/month
Female, age 50	$407/month
Male, age 30	$185/month
Male, age 40	$277/month
Male, age 50	$427/month

Policyholder	Average universal life insurance cost for $250,000 of coverage
Female, age 30	$87/month
Female, age 40	$128/month
Female, age 50	$195/month
Male, age 30	$103/month
Male, age 40	$150/month
Male, age 50	$222/month

Which type of permanent life insurance policy is right for me?

When considering permanent life insurance, you should weigh several factors:

Budget: Whole life insurance tends to be more costly, while final expense insurance tends to have reasonable premiums.¹ Coverage amounts can also impact price.
Appetite for risk: If you’re interested in being more hands-on in managing your policy, variable life insurance may be of greater interest since it’s tied to investment accounts that you can manage toward long-term goals. But keep in mind that if the stock market drops, you may lose value.
Age: The older you are, the more costly a policy is likely to be, especially when pursuing whole life or universal life policies.
Goals: If your goal is to leave an inheritance behind, for instance, then a permanent life insurance like whole life or universal life policies may be ideal. But if you just want to provide a little financial assistance for your funeral, final expense insurance can be a more cost-effective option.

Get a quote for permanent life insurance today

Permanent life insurance policies can offer lifelong coverage and additional peace of mind for you and your loved ones. Aflac offers both whole life insurance and final expense insurance policies to suit different budgets and goals. Start chatting with an agent today to discuss our coverage options and get a quote.

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