Compare life insurance quotes
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Side-by-side comparison
| Term life | Whole life | Universal life | |
|---|---|---|---|
| How long | 10–40 years | Lifetime | Lifetime (if funded) |
| Premiums | Fixed for the term | Fixed for life | Flexible within limits |
| Cash value | None | Guaranteed growth; may earn dividends | Grows with credited interest |
| Price at 40 ($500,000, man) | About $321 a year (20-year) | About $3,180 a year | Usually between term and whole life |
| Main risk | Cover ends; renewing later is expensive | High cost; surrender charges early on | Policy can lapse if underfunded |
| Best for | Income replacement, mortgages, children | Lifelong needs, estate planning | Permanent cover with flexibility |
Prices: NerdWallet, October 2026, nonsmoker.
How term life works
You choose a cover amount and a term, commonly 10, 15, 20, 25 or 30 years, and some insurers offer up to 40. If you die during the term, your beneficiaries receive the death benefit. If you outlive it, the cover ends and nothing is paid back (unless you bought a costly return-of-premium rider). Many term policies let you convert to permanent cover without a new medical exam before a set age or date, which protects you if your health changes.
How whole life works
Whole life lasts your whole life with fixed premiums. Part of each premium builds cash value at a guaranteed rate, and policies from mutual insurers may also pay dividends. You can borrow against the cash value or surrender the policy for it, but loans reduce the death benefit if unpaid, and surrendering in the early years usually returns far less than you’ve paid in.
How universal life works
Universal life also provides lifetime cover with cash value, but lets you adjust premiums and sometimes the death benefit. The cash value earns interest set by the insurer (or tied to an index, or invested in sub-accounts for variable universal life). The flexibility cuts both ways: if credited interest is lower than expected or you pay too little, the policy can lapse. Guaranteed universal life strips out most of the cash value to offer lifetime cover at a lower, fixed cost.
“Buy term and invest the difference”
At 40, the gap between term and whole life for $500,000 of cover is about $2,860 a year. Many advisers suggest buying term and investing that difference in a retirement account, which often grows faster than whole life cash value and stays under your control. This works only if you actually invest the money consistently.
When permanent life insurance makes sense
- You have a dependent with lifelong needs, such as a child with a disability.
- You expect to owe estate taxes or want to equalize an inheritance.
- You need to fund a business buy-sell agreement.
- You’ve maxed out tax-advantaged retirement accounts and want another tax-deferred savings vehicle.
- You want guaranteed cover for final expenses at any age; see our guide for seniors.
Questions to ask before you buy
- How long do I actually need cover? (See how much you need.)
- Can I afford the permanent premium for decades, even if my income falls?
- Can this term policy be converted later, and until what age?
- For whole or universal life: what are the surrender charges, and what does the illustration show at guaranteed (not projected) rates?
- What riders are included? See riders explained.
Every state gives you a free-look period, at least 10 days in many states, to cancel a new policy for a full refund. Use it to read the contract carefully. For prices, see our 2026 cost guide.
Frequently asked questions
Is term or whole life insurance better?
Term is better for most people who need to replace income for a set period, because it costs far less. Whole life suits lifelong needs and people who value guaranteed cash value.
What happens when term life insurance expires?
Cover ends. Some policies let you renew yearly at much higher prices or convert to permanent cover without a medical exam before a deadline.
Can I convert term life to whole life?
Many term policies include a conversion option that lets you switch to a permanent policy without new medical underwriting, usually before a set age or year.
What is cash value in life insurance?
A savings component in permanent policies that grows over time. You can borrow against it or withdraw it, though this reduces the death benefit.
What is the difference between whole and universal life?
Whole life has fixed premiums and guaranteed cash value growth. Universal life has flexible premiums and interest-sensitive cash value, which can lapse if underfunded.
Sources
- NerdWallet – Average life insurance rates (Oct 2026)
- NerdWallet – Best life insurance companies 2026
- NerdWallet – Life insurance riders
- North Carolina Department of Insurance – Life insurance FAQs
- MoneyGeek – Term life insurance rates by age (Sept 2026)
- LIMRA / Life Happens – 2026 Insurance Barometer
Insurance prices, discounts and rules change often and vary by state. Figures were checked in October 2026; confirm details with the insurer or your state insurance department.