Skip To Content
Blog Get a Quote
Search

Permanent vs. whole life insurance: What's the difference?

Here’s what you need to know

Simply put, whole life insurance is a type of permanent life insurance. Every whole life insurance policy is a permanent life insurance policy, but not every permanent life insurance policy is a whole life insurance policy.

In this article:

What is permanent life insurance?

Permanent life insurance is any life insurance policy that is designed to provide lifelong coverage. As long as you are able to pay your monthly premiums, your permanent life policy will remain active your entire life.

What is whole life insurance?

Whole life insurance is a type of permanent life insurance.

Whole life insurance generally includes a cash value component that can be borrowed against or used to pay future monthly premiums. Many people choose whole life insurance to take advantage of the policy’s cash value benefit, which can be used to cover home renovations, college education costs or retirement expenses.

Pro tip: Be careful with a cash value life insurance policy. If you borrow against your policy’s cash value and are unable to pay it back with interest, your beneficiaries could end up receiving a lower death benefit. You could also end up owing a hefty tax bill on the amount of money you borrowed if it’s more than the premiums you’ve paid in, so make sure you only withdraw as much of your policy’s cash value as you can afford to pay back.

A more affordable option: Term life insurance

Term life insurance covers a period of time (the “term”). Because it covers a shorter amount of time, including years where you’re younger, healthier and less likely to pass away, it is often much more affordable than permanent life insurance.

Term life policies allow you to get life insurance coverage for the years in which you are most likely to leave behind financial obligations.

By choosing a 10, 15, 20, 25 or 30-year term life insurance policy, you can carry enough life insurance coverage to provide for your beneficiaries until your mortgage is paid off or your children graduate from college.

When we reviewed online insurance quotes from State Farm, we found that a healthy, 35-year-old man might pay the following premiums for a whole life insurance policy:

Face valueMonthly premium
$250,000$282.10
$500,000$559.85
$1,000,000$1,115.35

In contrast, that same man might pay the following for a Haven Term policy, issued by MassMutual or its subsidiary, C.M. Life:

Face valueTerm lengthMonthly premium
$250,00030 years$20.82
$500,00020 years$20.72
$500,00030 years$34.99
$1,000,00020 years$34.08
$1,000,00030 years$63.24

Estimate based on pricing for eligible Haven Term applicants in excellent health. Pricing differences will vary based on ages, health status, coverage amount and term length. These prices do not reflect the rates for applicants in DE, FL, ND, NY and SD.

If you’re thinking about permanent life insurance, make sure you think about term life insurance as well. In some cases, whole life insurance could be the best life insurance option for you and your family. In other cases, term life insurance could provide the coverage you need at a much lower cost — making term life policies one of the most affordable ways of providing for your loved ones.

Default author headshot

About Nicole Dieker

Nicole Dieker has been a full-time freelance writer since 2012, with a focus on personal finance and habit formation. In addition to Haven Life, her work regularly appears at Lifehacker, Bankrate, CreditCards.com, and Vox. Dieker spent five years as a writer and editor for The Billfold, a personal finance blog where people had honest conversations about money, and is the author of Frugal and the Beast: And Other Financial Fairy Tales.

Read more by Nicole Dieker

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus

You might also like

Get our most-read stories, twice a month

What our customers are saying

Sign up for our newsletter

Get our most-read stories, twice a month

Thanks for signing up. See you in your inbox soon.