Why Is Whole Life Insurance More Expensive? 
Another way to look at the issue of whole life 's apparent high premium is to examine the difference between whole life , or any permanent -LRB- cash value -RRB- life policy , and term . Consider the purpose of the cash value . Cash value is representative of the policy reserves the insurance company establishes with the premiums they collect to pay claims . The premium on cash value policies is higher in the early years than what is needed to pay claims so it adds to the reserves for later when the premiums are less than the pure cost of insurance later in life and claims increase . In simplified terms , as one approaches age 100 , the cost for term coverage at that age is prohibitive -LRB- effectively $ 1,000 per $ 1,000 of death benefit -RRB- yet the level annual premium on the permanent policy purchased many years before is unchanged . The premium you pay for permanent life insurance ensures coverage can not be outlived like term insurance which almost always expires before you do . 