3 Best Whole Life Insurance Companies: Expert Rated In 2024

Here are Forbes Advisor’s picks for the best whole life insurance companies:

• State Farm – Best Overall
• Northwestern Mutual – Best for Reliable Policy Illustrations
• Penn Mutual – Best for Historical Investment Performance

State Farm earns the top spot in our rankings of the best whole life insurance companies. Whole life insurance from Northwestern Mutual and Penn Mutual also topped our rankings.

Company	Company - Logo	Forbes Advisor Rating	Forbes Advisor Rating	A.M. Best financial strength rating	Learn More CTA text	Learn more CTA below text	LEARN MORE	Types of life insurance policies sold
State Farm		5.0		A++ (Superior)	Compare Quotes	Compare quotes from participating carriers via Policygenius.com		Term Whole Universal
Northwestern Mutual		4.5		A++ (Superior)	Compare Quotes	Compare quotes from participating carriers via Policygenius.com		Term Whole Variable universal Fixed-rate universal
Penn Mutual		4.0		A+ (Superior)	Compare Quotes	Compare quotes from participating carriers via Policygenius.com		Term Whole Indexed universal Guaranteed universal Variable universal

Whole life insurance is a type of permanent life insurance designed for people with low risk tolerance and who want lifelong coverage with guaranteed premiums, death benefit and cash value growth.

Whole life insurance is one of the oldest forms of life insurance. For most of the 1900s, it was the most common form of life insurance in the United States. It continues to be popular today and represents 33% of total life insurance premiums, according to LIMRA, an industry-funded research group

A whole life insurance policy remains in force for the rest of your life as long as you pay the premiums. Before buying a whole life insurance policy, understand its cash value, living benefits, death benefits and dividends.

What Is Whole Life Insurance Cash Value?

Each time you make a premium payment for a whole life insurance policy, part of that premium is put into a cash value account. The remainder of the premium goes to paying internal policy expenses.

The cash value account grows tax-deferred, based on a guaranteed rate of return that is typically low compared to other types of permanent life insurance. Because of slow growth, it can take a long time before the cash value surpasses what you’ve paid in premiums.

You can choose to tap into your cash value by making a withdrawal, taking a life insurance policy loan or surrendering the policy. Withdrawals will reduce the death benefit your beneficiaries will receive. So will a policy loan if it’s not paid back.

What Are Whole Life Insurance Living Benefits?

Whole life insurance policies generally offer living benefits. Living benefits allow you to access money in your own death benefit while you’re still living, under specific circumstances.

The most common living benefits let you access your own death benefit money for long-term chronic illness or terminal illness (called an accelerated death benefit). Make sure you ask your insurance agent what living benefits are available before you buy the policy.

What Are Whole Life Insurance Death Benefits?

When you buy a whole life policy, you’ll list a life insurance beneficiary (or multiple beneficiaries) who will receive the death benefit payout when you die. You should also list contingent beneficiaries who will receive the payout if your primary beneficiaries are already deceased.

It’s important to know that whole life insurance has a guaranteed death benefit amount (the policy’s face value), but that amount does not include the cash value in the policy, no matter how much you’ve accumulated. Some policies offer a rider that will add the cash value to the face value for the death benefit, but expect to pay more for this feature.

What Are Whole Life Insurance Dividends?

Dividends are common on whole life insurance policies. “Participating” whole life insurance policies pay a dividend and are offered by mutual insurance companies. “Non-participating” whole life insurance policies do not pay a dividend and are offered by stock insurance companies.

You’ll typically have a choice of how to use your dividends. Common options include:

• Taking the dividend as cash
• Putting it toward your life insurance premiums
• Purchasing paid-up additions

Purchasing paid-up additions will increase the cash value and death benefit. If you have a policy loan out, dividends can be used to pay loan interest and to pay back the loan. Insurance companies may offer other dividend options.

The average cost of whole life insurance is $193 a month for a $250,000 policy for a 30-year-old female and $224 a month for a 30-year-old male.

Average Cost for a $250,000 Whole Life Insurance Policy

Age	Average monthly cost for a female buyer	Average monthly cost for a male buyer
Age 30	$193	$224
Age 40	$280	$313
Age 50	$419	$470

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Source: Forbes Advisor research. Average is based on the lowest quotes we found online for healthy nonsmokers.

Average Monthly Cost for a $500,000 Whole Life Insurance Policy

The average cost of whole life insurance is $352 a month for a $500,000 policy for a 30-year-old female, and $394 a month for a 30-year-old male.

Age	Average monthly cost for female	Average monthly cost for male
Age 30	$352	$394
Age 40	$506	$564
Age 50	$752	$847

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Source: Forbes Advisor research. Average is based on the lowest quotes we found online for healthy nonsmokers.

If you pay annually instead of monthly for a life insurance policy, you can receive a small price break.

Factors That Affect the Cost of Whole Life Insurance

The coverage amount you select will have a large impact on your premium. Other factors that typically affect whole life insurance premiums include:

• Age and gender
• Height and weight
• Past and current health conditions
• The health history of your parents and siblings
• Nicotine and marijuana use, including nicotine patches and gum
• Substance abuse
• Credit
• Criminal history (such as felonies)
• Driving record (especially DUI convictions and moving violations, such as speeding tickets)
• Dangerous hobbies and activities (such as piloting planes)
• Life insurance riders you add when you buy the policy

Buying enough whole life insurance coverage is vital, but there are a lot of things to consider when deciding how much is enough. Our life insurance calculator can help simplify that decision.

A general rule of thumb for determining how much life insurance you need is to add up your financial obligations that need to be covered by life insurance (such as a mortgage), and then subtract your assets (such as savings and existing life insurance).

Speaking with a financial advisor is the good way to determine your life insurance needs within the broader picture of your personal finances.

Here are some points to consider when looking for the best whole life insurance policy:

• The insurer’s dividend history and dividend options are an important component in choosing a whole life insurance policy.
• Consider the company’s financial strength. You are purchasing a long-term contract, so you want to choose a company that will be around to pay claims.
• Look at multiple life insurance companies. Rates will vary based on age, gender, health history, smoking status and coverage amount (called rate bands). Insurance companies may be competitive in one niche but not in another.

The most important factor in choosing a whole life insurance policy is to “understand that the premium is not the ‘cost’ of a whole life insurance policy,” says Flagg. “The cost is what’s deducted from that premium for ‘cost of insurance’ charges and policy expenses.”

The cash value amount on an existing permanent life insurance policy such as whole life insurance is affected by how much is deducted from your premium for policy fees and charges, as well as how much you have in dividends.

To determine the costs on a whole life insurance policy, request that the company or life insurance agent provide a calculation of internal policy costs. For example, our data provider, Veralytic, can provide a report on your policy.

While whole life insurance may seem straightforward, there are things to know:

• Dividends are not guaranteed. Sales illustrations include two basic scenarios. There is a projection of the cash value and death benefit based on current dividends, cost of insurance and expense charges. There is also a projection of cash value based on guaranteed values. Typically, whole life insurance is bought and sold based on the projections using current assumptions. Those projections might not pan out.
• You might end up paying premiums longer than you expected. “While the maximum annual premium amount can be guaranteed, the maximum number of years that premiums can be required is generally not guaranteed,” notes Flagg of Veralytic.
• Changes in dividends are not disclosed. The insurance company will disclose the amount of its annual dividend and possibly the interest rate component of the dividend. However, the company won’t announce whether the dividend is different from the projected dividends in policy illustrations. Dividends are at the discretion of the insurance company and they don’t disclose the methodology used in declaring dividends.
• Premiums may become unaffordable. Whole life insurance premiums are significantly higher than term life insurance. People often find that they’re not able to pay the high premiums after a couple of years. The high premiums can also cause people to buy less coverage than they really need.
• Surrender charges. What if you decide in the future that you no longer want the policy? If you bought it fairly recently, don’t expect to get any money back. Surrender charges on whole life insurance will be close to 100% for the first two to three years of the policy. The surrender charge decreases each year but will typically last 10 to 16 years.
• High lapse rates. The lapse rate is the percentage of policies that are terminated in a year. Whole life insurance has a relatively high lapse rate: Almost 14% of whole life policies lapse in the first year, an additional 9.5% lapse in the second year and 6% in the third year, according to the 2019 Society of Actuaries U.S. Individual Life Insurance Persistency Report. By comparison, about 8% of term life policies and slightly under 7% of universal life insurance policies lapse in the first year.

Whole life insurance isn’t the right life insurance for every situation. In some cases, other types of life insurance might be a better choice.

Universal Life Insurance

If you want lifetime coverage but also flexibility with premiums and the death benefit amount, and the ability to accumulate cash value, universal life insurance may be a good option.

Indexed Universal Life Insurance

Indexed universal life insurance connects a policy’s cash value to an index like the S&P 500. The index’s ups and downs influence the policy’s cash value amount. In that way, a policyholder’s investment choice directly affects an indexed universal life insurance policy’s value, which is unlike whole life.

Being a type of universal life policy, policyholders with an indexed universal policy can often change death benefits and premium payments, too.

Variable Life and Variable Universal Insurance

Variable life insurance and variable universal life are forms of permanent life insurance. They require you to take an active role choosing investment options for your cash value and monitor performance. With whole life insurance, you don’t choose investments.

Term Life Insurance

Term life insurance is often the cheapest of life insurance, but it won’t guarantee coverage for the rest of your life like whole insurance can. It offers level premiums during a specific period of time, such as 5, 10, 15, 20 or 30 years. After the level term period, rates go up substantially every year if you renew. With whole life insurance, your premiums stay the same each year for the duration.

Term life insurance can be optimal if you need coverage until large debts, like a mortgage, are paid off or until your children are through college. Term life insurance does not include a cash value component.

Whole life insurance can be a great option for people seeking fixed premiums with the low-risk benefit of guaranteed cash value accumulation and a guaranteed death benefit. Since it is a type of permanent life insurance and offers lifetime coverage, you only have to purchase it once. Premiums for whole life insurance are often high, so be sure to consider affordability before buying a policy.

To find the best whole life insurance, we used data provided by Veralytic, an independent publisher of life insurance research and analytics. Veralytic measures the competitiveness of permanent life insurance products. Veralytic can provide a customized analysis of life insurance policies to life insurance buyers and current policyholders.

Cost competitiveness of whole life insurance policies (30% of score): This measures the level of premiums and internal policy charges, including the cost of insurance, fixed administration expenses and cash value-based wrap fees.

Historical performance (25% of score): This measures whether the historical performance of the company’s investments that fuel cash value growth are superior to other companies’ comparable products.

Reliability of policy illustrations (25% of score): This factor measures the reliability over time of the company’s illustrations for its permanent life insurance products. When you plan to be holding on to a policy for decades and counting on cash value to accumulate, you want an illustration that’s accurate.

Financial strength (10% of score): This measure incorporates the insurer’s financial strength ratings from four major ratings agencies: AM Best, Fitch, Moody’s and Standard and Poor’s. Financial strength is particularly important when you’re relying on a company’s ability to pay claims many decades from now.

Access to cash value (10% of score): This measure evaluates the liquidity of cash value and a policyholder’s access to it. Some policies will build cash value better in the early years, and with other companies, you may be waiting several years before you have meaningful cash value within a policy. Generally speaking, the higher the liquidity, particularly in early policy years, the better—but some insurers charge more for greater liquidity, so consider the possible tradeoff.

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