Term vs Whole Life Comparison
Compare 30-year cost: cheap term + invest-the-difference vs more-expensive whole life with cash value.
Result
"Buy term + invest difference" advantage
$510,088
Term saves $5,400/yr; invested at 7% over 30 years.
- Total term premiums (30y)$18,000
- Total whole-life premiums (30y)$180,000
- Annual savings (term path)$5,400
- Future value of those savings$510,088
- Coverage during this period$500,000 (same on both paths)
Step-by-step
- Annual savings: 6,000 − 600 = $5,400.
- Invest those savings annually at 7% for 30 years.
- Future value: $510,088 — typically far exceeds whole-life cash value.
How to use this calculator
- Enter coverage and quoted premiums (term and whole life).
- Pick a horizon and expected investment return.
- Read how much wealth the term-plus-invest path produces.
About this calculator
"Buy term and invest the difference" is the most common financial-planner advice for life insurance. Term insurance is much cheaper than whole life for the same coverage; investing the saved premium typically out-grows whole-life cash value handily. Whole life pays insurance commissions worth ~6× the first-year premium, which suppresses returns for 10+ years.
Frequently asked
Rarely for typical middle-class. May make sense for: estate-tax planning at high net worth, business buy-sell agreements, or those without discipline to invest the difference.
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