Term vs Whole Life Comparison

Compare 30-year cost: cheap term + invest-the-difference vs more-expensive whole life with cash value.

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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

Is whole life ever the right choice?+
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.
Why is whole life so expensive?+
It bundles insurance + savings + commission. You're paying for a financial product wrapped in insurance, with high acquisition costs.
What's a realistic investment return?+
S&P 500 has averaged ~7% real (after inflation) long-term. Conservative use 5-6%; aggressive use 8-10%.
What if I outlive the term?+
Term policy ends, no payout. But by then your need is usually much smaller (kids grown, mortgage paid). The savings have built a self-insurance cushion.
Universal vs whole life?+
Universal life has more flexibility but higher complexity and similar fee drag. The buy-term-invest-difference logic still mostly favors term.

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