Term vs Whole Life Insurance Calculator
Enter your age and coverage needs to compare term life and whole life insurance — including the powerful "buy term and invest the difference" strategy.
Term life insurance is coverage for a specific period (10-30 years) with no cash value — you pay lower premiums and get a death benefit only. Whole life insurance is permanent coverage with a cash value component that grows tax-deferred, but premiums are 5-15x higher than term for the same death benefit.
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Things to Know
Essential concepts for understanding your results
Cost DifferenceHow much cheaper is term life insurance?
Term life costs 5-15x less than whole life for the same coverage. A healthy 35-year-old male: $500,000 20-year term costs ~$25/month. $500,000 whole life costs ~$350/month. The $325/month difference ($3,900/year) invested in index funds at 8% for 20 years grows to approximately $191,000. This is the 'buy term and invest the difference' strategy — and it almost always produces more wealth than the whole life cash value component earning 2-4%.
When Whole Life WinsIs whole life insurance ever the right choice?
Whole life is appropriate in narrow circumstances: estate tax planning (irrevocable life insurance trust to pay estate taxes without liquidating assets), special needs planning (funding a supplemental needs trust), guaranteed insurability (locking in coverage regardless of future health), and forced savings for people with zero investment discipline who would otherwise spend the difference. For 90-95% of families, term life plus investing the premium savings is the mathematically and practically superior strategy.
Buy Term and Invest the Difference
This is the strategy recommended by most fee-only financial advisors. Term life premiums are 5-15x cheaper. If you invest the monthly savings in a low-cost index fund, you'll almost always build more wealth than whole life's cash value — with full control and liquidity.
When Whole Life Makes Sense
Whole life may be appropriate for estate planning (death benefit to pay estate taxes), high-net-worth individuals who have maxed all other tax-advantaged accounts, or people who need permanent coverage for a dependent with lifelong special needs. For 90%+ of families, term is the better choice.