Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: Feb 7, 2022

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It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance provider and cannot guarantee quotes from any single provider. Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.

The Brief

  • Term life insurance lasts for a specific period
  • Permanent life insurance doesn’t have an expiration date
  • Whole life and universal life insurance are permanent life insurance policies

Do you want to compare term vs. permanent life insurance quotes? Term and permanent life insurance are available through insurance companies across the United States.

But which one is better? And what does term life insurance mean? Don’t worry, we’re here to help.

Our guide has everything you need to know about term vs. permanent life insurance, the cost of insurance through sample life insurance rates, and which companies provide the best life insurance policies.

Read on to learn all about term vs. permanent life insurance. If you’re ready to start comparing multiple quotes from various companies near you, enter your ZIP code in our free comparison tool above.

Is term life insurance better than permanent life insurance?

No, it isn’t. Life insurance policies aren’t necessarily better than one another. Life insurance needs vary for each person, so a term life insurance policy may be better for someone trying to save money.

However, a person with a flexible budget can invest in permanent life insurance to get more perks with a life insurance policy. Everything depends on what you want your life insurance policy to do.

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What’s the difference between term life and permanent life insurance?

Term insurance lasts for a few years. For example, term life insurance is like renting life insurance for a specific number of years. The most common term lengths for term life insurance are between five-year and 30-year terms.

You’ll also receive a policy limit. Most term life insurance limits are from $10,000 to $1 million.

Some life insurance companies provide over $1 million in death benefits.

Before term life insurance expires, your life insurance company will give you an option to reapply for term life insurance.

Permanent life insurance doesn’t expire, and it lasts your entire life. You get the same benefits as term life insurance, and you’ll receive an account that accumulates cash over time.

Since permanent life insurance has more benefits, it’s more expensive than term life insurance. One-half of your permanent life insurance rate goes toward your life insurance, while the other half goes into the life insurance’s cash value.

What are the disadvantages of term life insurance?

Term life insurance may be cheaper, but it doesn’t have the investment opportunities like permanent life insurance. You’ll need to add life insurance riders to get additional benefits.

Life insurance riders are add-ons that supplement your insurance policy and expand coverage.

If you’ve invested a lot into a term life insurance policy, it may be a good idea to convert it to a permanent life insurance policy.

Term vs. Permanent Life Insurance Rates: Which is cheaper?

Several factors determine whether affordable term vs. permanent life insurance is available to you. Life insurance companies consider your age, gender, health, hobbies, occupation, policy length, death benefits, and policy type when calculating rates.

Another main factor in life insurance is whether you’re a smoker or non-smoker. Let’s look at the estimates for term life and permanent life insurance.

Average Monthly Term vs. Whole Life Insurance Rates
Policyholder Age & Tobacco UseAverage Monthly Term Rates: MaleAverage Monthly Term Rates: FemaleAverage Monthly Whole Rates: MaleAverage Monthly Whole Rates: Female
25-Year-Old Non-Smoker$15$13$94$85
35-Year-Old Non-Smoker$15$14$128$113
45-Year-Old Non-Smoker$22$20$191$243
55-Year-Old Non-Smoker$44$34$295$422
65-Year-Old Non-Smoker$106$73$528$204
Average Annual Rates for Non-Smokers$40$186$247$204
25-Year-Old Smoker$27$21$116$107
35-Year-Old Smoker$30$24$157$146
45-Year-Old Smoker$53$41$224$206
55-Year-Old Smoker$114$83$350$321
65-Year-Old Smoker$270$186$600$204
Average Annual Rates for Smokers$99$71$289$253
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For this example, we used term life vs. whole life insurance rates (a type of permanent life insurance policy). Term life insurance is more affordable. Meanwhile, whole life insurance has more expensive life insurance rates per month.

Why are life insurance companies increasing monthly rates?

As you get older, life insurance rates increase. Life insurance companies also look at statistics of aging. According to the Centers for Disease Control (CDC), a person’s life expectancy decreases as they age.

Suppose a person has a critical or chronic illness, the risk of life insurance claim increases. Therefore, life insurance companies issue higher rates to offset the risk.

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What are the best life insurance companies for a term and permanent life insurance policy?

Before you buy term vs. permanent life insurance, you should shop around for the best coverage. If you’re not sure where to look, start with the top life insurance companies in the United States.

Check out the table below to see the top 10 life insurance companies in America.

Top 10 Life Insurance Companies By Direct Premiums Written in 2020
RanksCompaniesDirect Premiums WrittenMarket Shares
1stMetLife Inc.$103,335,05513%
2ndEquitable Holdings$62,688,6578%
3rdPrudential Financial Inc.$61,913,9768%
4thNew York Life Insurance Group$40,211,6425%
5thMassachusetts Mutual Life Insurance Co.$38,461,1975%
6thPrincipal Financial Group Inc.$26,439,6713%
7thLincoln National Corp.$25,385,4503%
8thWestern & Southern Financial Group$22,920,7173%
9thTransamerica$22,875,1093%
10thAmerican International Group (AIG)$22,620,8033%
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These are the best companies by market share and direct premiums. The market share shows the portion of the life insurance industry a company controls, and direct premiums are how much each company earns from its customers.

Which life insurance companies have the best ratings?

Another thing you should consider is a life insurance company’s ratings. Some of the most reliable ratings come from A.M. Best.

A.M. Best is a rating agency that monitors insurance companies’ financial strength, credit, and customer satisfaction.

So which life insurance companies have the best A.M. Best ratings? We’ve researched that data for you and found the results.

Top Five Life Insurance Companies By Market Share and Their A.M. Best Ratings
CompanyMarket ShareA.M. Best Rating
Northwestern Mutual8.2%A++
Lincoln National5.8%A+
New York Life5.7%A++
MassMutual4.8%A++
Prudential4.5%A+
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Although these companies don’t have the largest market share, they have superior ratings over their competitors. The A++ and A+ ratings mean that each company manages money well and promptly pays out claims. It also means that each company meets obligations to customers.

Term vs. Permanent Life Insurance: The Bottom Line

Term life insurance is only for a specific time. The higher your term length, the more you’ll pay for life insurance. Permanent life insurance is more expensive, but it won’t expire.

Also, permanent life insurance provides more benefits, such as a cash account. Some permanent life insurance policies even use your cash value to invest in the stock market.

If you want to save money and get the best insurance policy, compare term vs. permanent life insurance to secure the cheapest rates. Use our free comparison tool below to compare multiple insurance companies in your area.