Whole life insurance offers lifetime coverage and builds cash value, but not all policies are created equal. Read about our top provider picks below.
Updated:
Apr 18, 2024
Written by
Saad Imran
Saad Imran
Edited by
Tori Addison
Tori Addison
The MarketWatch Guides team recommends Nationwide and New York Life as our top whole life insurance providers. We researched and reviewed life insurance companies nationwide to determine the best picks for whole life coverage based on policy options, endorsements and other benefits.
Our Top 7 Picks for Whole Life Insurance Companies in 2024
Our team reviewed the best life insurance companies nationwide and selected the following options for applicants seeking whole life policies.
- Nationwide: Our pick for bundling insurance
- New York Life: Best for cash value policies
- State Farm: Our pick for customer satisfaction
- MassMutual: Best for permanent life insurance
- Penn Mutual: Our pick for custom coverage
- Northwestern Mutual: Our pick for a personalized experience
- Guardian Life: Best for an in-person experience
Compare Top Whole Life Insurance Companies
We based cost data on quotes collected for 35- and 45-year-old men and women without a history of tobacco use seeking $250,000 in coverage.
Nationwide
Best for whole life insurance
BBB Rating A+
New York Life
Best for cash value policies
BBB Rating A-
State Farm
Best for customer satisfaction
BBB Rating A+
MassMutual
Best for permanent life insurance
BBB Rating A
Penn Mutual
Our pick for custom coverage
Northwestern Mutual
Best for a personalized experience
BBB Rating B
Guardian Life
Best for an in-person experience
BBB Rating A
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Types of Permanent Life Insurance Policies
Permanent life insurance coverage lasts for the policyholder’s life, as long as premiums remain to date. When the insured person dies, the insurance provider makes a death benefit payout to their named beneficiaries.
You can also use permanent life insurance as a source of financial security while you are still alive. A portion of premiums paid into permanent life insurance policies is allocated to a cash value component. Cash value can be borrowed against, invested or withdrawn, depending on the policy type and other restrictions.
There are various policy types under the permanent life insurance umbrella, including whole, indexed, variable and universal coverage.
Whole Life Insurance
Whole life insurance premiums are level and do not change over time. The cash value of your policy is also guaranteed to grow at a specific annual rate. Like all permanent life insurance policies, a whole life insurance policy’s death benefit is paid when the insured person dies, as long as the premiums are paid.
Universal Life Insurance
Universal life insurance, another type of permanent life insurance policy, allows for flexibility in the premium payment amount and death benefit. Instead of agreeing to a fixed premium rate and guaranteed cash value growth as with a whole life insurance policy, you can make adjustments — subject to limitations — according to your needs.
There are several types of universal life insurance policies, and they differ by how cash value grows. Generally, universal life insurance policies do not guarantee cash value growth. Instead, cash value growth depends on market conditions. In some cases, losses can occur.
Variable Life Insurance
If you want to use your life insurance’s cash value component as an investment vehicle, variable life insurance could be right for you. Unlike many other life insurance policies, variable life insurance allows policyholders to invest their premium payments in a range of investment options.
The policy's cash value is directly linked to the performance of these investments. So, your cash value can grow at a rate higher than what’s guaranteed by a whole life insurance policy. On the other hand, you risk a loss of your initial investment. Providers sometimes limit investment losses by implementing a floor that can save you from a catastrophic financial loss.
Like whole life insurance, variable life insurance premiums remain level.
Variable Universal Life Insurance
Variable universal life insurance is a more complex type of coverage that combines the features of both variable and universal life policies. These policies allow you to adjust your premium payment and death benefit amounts in addition to allowing you to invest your cash value in a range of investment options.
Indexed Universal Life Insurance
Indexed universal life insurance invests the policy’s cash value portion into an index. Common stock indexes used by life insurance companies include the Standard and Poor’s 500 and the Nasdaq Composite.
While indexed universal life policies provide a guaranteed minimum interest rate on the cash value, the potential for higher returns comes from interest earned on the performance of your chosen stock index.
Policyholders can benefit from market gains while being shielded from losses, an appealing option for those who seek some level of investment opportunity combined with the security of a life insurance policy. However, market gains are often capped, limiting your upside.
How Does Whole Life Insurance Work?
Whole life insurance is a type of permanent life insurance protection that pays a death benefit to beneficiaries no matter when the insured person dies, as long as premiums are paid. Beneficiaries can use the funds from the insured’s life insurance payment for any purpose.
Whole life insurance policies build cash value, which the policyholder can access through withdrawals and loans. Every time you pay a premium, your life insurance company will allocate a portion of it into an account that you can withdraw from or take out a loan while you are still alive. The cash value is guaranteed to grow tax-deferred at a specified rate.
Factors That Affect the Cost of Life Insurance
Life insurance companies don’t just look at the amount of coverage when setting life insurance premiums. Providers underwrite policies based on factors about the individual applicant, such as their age, gender, health and other potential risk factors. Here are common considerations carriers take when underwriting life insurance policies:
- Age: As you age, your risk of death increases, which makes it more likely that a claim will be filed on your policy.
- Gender: Women have a longer life expectancy than men and generally pay less for life insurance as a result.
- Health: Your health is a major factor in your life insurance premiums. Providers may ask you about your medical history or request that you take a medical exam to determine your risk level.
- Pre-existing or chronic conditions: When you apply for life insurance, you’ll have to disclose chronic illnesses such as diabetes, heart disease, cancer or sexually transmitted diseases. If you are affected by pre-existing conditions, you may be placed in a higher-risk pool at a greater cost or even excluded from coverage.
- Lifestyle: If you engage in smoking, excessive drinking or other unhealthy lifestyle behaviors, it may negatively impact your premiums.
- Dangerous hobbies: Some activities put you at an increased risk of death. Dangerous hobbies such as skydiving, skiing or rock climbing increase your beneficiary’s likelihood of filing a claim against your policy and, therefore, your premiums.
- Driving record: If your driving record includes accidents, DWI/DUI citations, claims, or tickets, your life insurance cost may increase.
- Location: Companies use regional mortality rates and life expectancy data to factor geographical risk into your life insurance rates.
Is Whole Life Insurance Worth It?
Whole life insurance guarantees a death benefit so long as you pay the policy premiums, and it accumulates cash value as a living benefit that you can withdraw or borrow against. However, it’s substantially more expensive than term life insurance. So, is whole life insurance worth it?
Permanent life insurance lasts for your entire life — as long as you pay the policy’s premiums. It also accumulates cash value, which the policyholder can access before they die. This additional investment component can make whole life policies a smart choice if you want to supplement your retirement funds or have complex financial obligations.
If anyone depends on your income or you want to guarantee a payout to cover your end-of-life costs no matter when you die, whole life insurance is likely worth it. If you have no lifelong dependents, your significant financial obligations (like a mortgage or paying for college) have been met and you have no debt, you may want to reconsider buying whole life insurance.
Frequently Asked Questions About Whole Life Insurance
There is no ideal age to buy whole life insurance, but there are factors that impact which policy you should buy, like your dependents and financial obligations. That said, it’s usually better to buy a whole life policy when you’re younger, as you can lock in lower premiums that won’t increase for the rest of your life.
There are a few major differences between whole life insurance and term insurance. Whole life offers lifelong coverage, and term insurance covers you for a finite period of time, known as a term. Whole life insurance also builds cash value and is more expensive.
Whole life insurance aims to provide a guaranteed death benefit for as long as premiums are paid and build cash value that the insured can use before they die. Its higher limits make it good for leaving behind an estate, replacing a lost income or covering lifelong financial obligations or debt.
Yes, whole life insurance has a cash value component. There is less flexibility and potential for growth than universal life cash value, but it features a fixed interest rate and guaranteed growth.
