How Much Does Whole Life Insurance Cost?

Sean McGinn is an assistant director of Product Positioning in the Risk Products department at Northwestern Mutual. 

When you’re considering life insurance, you’ve got a lot of options. Term life insurance, with its relatively inexpensive cost, can work great when you need a large, temporary death benefit for  limited time. But other types of life insurance—like whole life insurance—offer a lifetime of coverage and additional benefits that you can access during your life. It’s a flexible, tax-advantaged financial product that can help you reach many financial goals.  

What affects the cost of whole life insurance?  

The cost of any type of policy can vary from company to company, and policies  can be customized based on your goals. This is great because it allows a policy to be tailored to your needs. But the customization means the amount you might pay can vary widely. 

The cost of a whole life insurance policy takes several things into account. Your quote will depend on things like: 

• Your age – You’ll pay less per year if you start your whole life insurance policy when you’re younger. 

• Your health – Your overall health and whether you smoke will impact the amount you pay. 

• Your gender – Because women tend to live longer, they can expect to pay slightly less. 

• Your death benefit – Of course, you’ll pay more for a larger death benefit. 

• Your policy design – Whole life insurance policies can be structured in many different ways and include a variety of optional additional benefits. This structure can impact the monthly cost. 

Policy costs can vary greatly depending on your individual circumstance, so it’s really hard to share an average cost of a whole life insurance policy. But with a few assumptions, we’ll show you a range of the cost.  

How much is a whole life insurance policy per month?  

A whole life policy will be designed custom to you, so it’s difficult to give an estimate of exactly how much a policy will cost. But let’s walk through an example.  

Consider a 35-year-old man who doesn’t smoke and is in good health. He talked with a financial advisor and decided that a policy with a $500,000 death benefit is good for his situation.

Depending on the insurance company,¹ the cost for his policy could fall between $542 and $708 per month—or approximately $6,500 to $8,500 per year—payable until age 100.  

However, making even small changes to his situation can change this cost. Say the man wants to pay for his policy only until he’s 65. The cost will be higher. Perhaps he wants to maximize (or minimize) the growth of cash value—money that he could access while still alive. This can also affect the cost. 

Let’s say the policy will be for a woman (also 35, in good health and doesn’t smoke) for the same $500,000 death benefit. She might expect to see quotes around $700 per month. Someone who is a different age, smokes or has a different health history will see quotes in a different range.  

This is why it’s a good idea to work with a financial advisor when selecting life insurance. Your advisor can get to know you and recommend a policy that’s a good match with your situation. In fact, in many cases, an advisor might recommend several different types of life insurance policies that can work together to achieve your goals. 

In addition, your advisor can also take a look at your big financial picture and show you how life insurance can work with other financial tools to help you reach your financial goals.  

Is whole life insurance really worth it?  

As you consider the cost, it’s natural to think about the value as well. There are a number of benefits of whole life insurance. Once the policy starts, your premiums will never go up² unless you make changes.  

Some companies also pay dividends, which you can apply toward your premiums, take as cash or use to purchase extra insurance (this can help a whole life insurance policy grow faster than what’s guaranteed).  

Your policy can also build cash value. While it can take some time to build, this cash value can eventually become a significant sum. That becomes money that you can access at any time for any reason.⁴ Since the cash value of whole life insurance always grows, it can become an important, stable part of your financial plan. 

When you work with your advisor to design a policy, it can be a powerful utility tool in your financial toolbelt. Your advisor can help you understand the pros and cons of a permanent policy and show you how life insurance can help you achieve your financial goals.