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

UPDATED: Aug 3, 2021

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The Brief

  • Permanent life insurance provides a cash benefit to the insured, and their loved ones benefit after the insured’s death
  • Whole life policies provide cash value that can be utilized for disbursements such as emergency savings or retirement income
  • Payments for universal life insurance are flexible and have cash accumulation

A life insurance policy can offer financial assistance to your loved ones after your death or even during financially stressful situations while you’re still alive.

If you buy life insurance, you have a wide range of choices ranging from permanent life insurance to term insurance policies. When it comes to permanent life insurance, universal life insurance and whole life insurance are permanent policies you may want to consider.

While both policies can accumulate cash value and benefit your loved ones, they have some differences. Understanding the differences between whole life vs. indexed universal life insurance can help you choose which is the best for you.

Keep reading to learn more and use our free quote comparison tool below to get free whole life vs. indexed universal life insurance quotes from local companies in your area. Enter your ZIP code above to get started.

How much is whole life vs. indexed universal life insurance?

Whole life vs. indexed universal life insurance rates depend on the insurance company you buy your policy from.

Let’s take a look at some average whole life insurance rates:

Average Annual Rates for Whole Life Insurance Policies by Coverage Level: Male vs. Female
Coverage Amount30-Year-Old Male Average Annual Rates30-Year-Old Female Average Annual Rates
$100,000 Policy$98.47$87.78
$250,000 Policy$223.76$197.78
$500,000 Policy$438.82$387.30
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Now, let’s take a look at some average indexed universal life insurance rates:

Monthly Universal Life Insurance Rates, $250,000, for Non-Smokers
AgeMonthly Rate for FemalesMonthly Rate for Males
25-35$71 - $96$96 - $122
35-45$96 - $148$122 - $171
45-55$148 - $238$171 - $303
55-65$238 - $445$303 - $491
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Whole life insurance is typically cheaper than IUL policies because the potential for cash value growth is lower. However, whole life insurance is still more expensive than other types of insurance.

In addition, your life insurance rates are also determined by your age, gender, health, and more.

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What is the difference between whole life and indexed universal life insurance?

While permanent life insurance policies usually offer cash values, they grow in many different ways depending on the type of insurance.

Whole life insurance is a simple permanent life insurance policy with cash value accumulation. Indexed universal life (IUL) insurance plans, on the other hand, are more like retirement income benefits. The money accumulated in an IUL plan grows tax-deferred and may be used to pay premiums.

In reality, rather than a fixed death benefit, many IUL insurance policies are marketed based on the increasing cash value and the ability to grow wealth. The increase in the cash value of an IUL policy is limited and is dependent on the success of a certain market index such as the S&P 500.

With index growth, you could earn a substantial amount toward your cash value. However, your premiums may increase in order to keep your policy in place if your cash value does not increase.

Some policies may provide various investment choices to increase your cash. Therefore, the rate of growth depends on what you select and how you execute these options.

Whole life insurance typically does not include investment options, although some may pay dividends based on the insurance company’s performance.

Policies with dividend payments may have an added value but are not offered by all policies. You may use the money from dividends by raising your death benefit, receiving cash, reducing your premium payments, and more depending on the options provided by your insurance company.

What are the pros and cons of whole life insurance?

If you’re considering buying whole life insurance, it’s important to understand its advantages and disadvantages.

The advantages of whole life insurance include:

  • Guaranteed death benefits as long as your pay your premiums
  • Fixed premiums that do not increase with age
  • The growth of your cash value is guaranteed
  • No additional medical exams
  • You can borrow against the cash value of the policy
  • You can choose to surrender the policy and receive the cash value

The disadvantages of whole life insurance include:

  • The growth potential is not as high as for some other insurance policies, such as IUL
  • It is more expensive than term life insurance and may not be worth it if you’re not taking full advantage of the policy’s characteristics
  • You may need the help of a professional to understand the full benefits of whole life insurance

Whole life insurance is often considered to be one of the safest choices for individuals seeking to provide for their loved ones after they pass away.

As a result, many life insurance companies offer whole life insurance policies, and you should make sure you’re thoroughly evaluating each company before you choose one.

What are the pros and cons of indexed universal life insurance?

Is indexed universal life worth it? For those who are considering buying indexed universal life insurance, you should understand the advantages and disadvantages.

The advantages of an IUL policy include:

  • Greater options for customizing your policy.
  • Tax-free cash value accumulation
  • Higher returns more likely than with other policies
  • You can choose to borrow against the policy later on in your life

Why is indexed universal life bad? The disadvantages of an IUL policy include:

  • Earnings are determined by equity performance, which can fluctuate
  • Costs more than other types of life insurance
  • Earnings may have a cap
  • You will likely need the help of a professional that understands all of the policy options.

Indexed universal life insurance plans are a relatively new kind of life insurance policy. Their earnings potential is linked to a stock index, as the name suggests. These measures can be riskier and more complicated.

Should I buy whole life or indexed universal life insurance?

When you consider whole life vs. indexed universal life insurance in terms of face value, whole life insurance seems to be the best because it has cash value guarantees that are not affected by external market conditions.

In addition, when you consider whole life vs. indexed universal life insurance rates, the rates of IUL are higher than whole life insurance.

IUL also has flexible premiums, which could increase. Whole life insurance premiums are fixed and can’t change.

Ultimately, if you wish to buy either of these policies, you should understand their terms and seek advice from an insurance professional before deciding which policy to settle for.

Enter your ZIP code into our free comparison tool below to compare affordable whole life vs. indexed universal life insurance companies near you.