Term vs Whole Life Comparison

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

Inputs

Result

Loading calculator…
—

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.

Related calculators

Life Insurance Needs Calculator (DIME)
How much life insurance do you need? DIME = Debt + Income (× years) + Mortgage + Education.
Annuity Payout Calculator
Fixed monthly payout from annuity principal: PMT = P × r / (1 − (1+r)^(−n)).
Long-Term Care Insurance Cost Estimator
Average annual premium varies sharply with age at issue — buying earlier is much cheaper.
Disability Insurance Needs Calculator
Compute monthly benefit needed: typically 60-70% of gross income, less Social Security DI.
Life Insurance Cash Surrender Value
Cash surrender = cash value − surrender charges. Estimate before cancelling permanent policy.
Umbrella Policy Coverage Calculator
Recommended umbrella coverage = net worth + 5-10× annual income (lawsuit-protection rule of thumb).

More tools you might like

Hand-picked tools that pair well with this one — same audience, same intent.

Life Insurance Cash Surrender Value
Calc

Cash surrender = cash value − surrender charges. Estimate before cancelling permanent policy.

Life Insurance Needs Calculator (DIME)
Calc

How much life insurance do you need? DIME = Debt + Income (× years) + Mortgage + Education.

Long-Term Care Insurance Cost Estimator
Calc

Average annual premium varies sharply with age at issue — buying earlier is much cheaper.

Umbrella Policy Coverage Calculator
Calc

Recommended umbrella coverage = net worth + 5-10× annual income (lawsuit-protection rule of thumb).

Disability Insurance Needs Calculator
Calc

Compute monthly benefit needed: typically 60-70% of gross income, less Social Security DI.

Auto Lease Calculator
Finance

Monthly lease payment from MSRP, capitalized cost, residual value, money factor, term, sales tax, and down payment — using the standard lease-payment formula (depreciation + finance + tax).