Term vs Whole Life Insurance Calculator

Not always, but for most families it is the mathematically superior strategy. Term insurance costs significantly less, allowing you to invest the premium savings. Over 20-30 years, the invested difference typically exceeds the whole life policy's cash value. Whole life can make sense for high-income earners seeking tax-advantaged savings, estate planning, or lifetime coverage needs.

When the term period ends, your coverage ends — and so do your premium payments. The idea behind "buy term and invest the difference" is that by the time your term expires, your investments have grown large enough that your family no longer needs life insurance (self-insured). You can also renew some term policies, though at much higher rates.

Whole life policies have a guaranteed minimum cash value growth (typically 2-4%), plus potential dividends from mutual insurers that can increase returns. However, the first few years of premiums mostly go to commissions and fees, so early cash value is very low. It typically takes 10-15 years to break even on a whole life policy, which is why buying term and investing the difference often comes out ahead.