Whole life costs far more than term. See what investing the difference could build instead.
Compares buying term life insurance and investing the premium savings against paying higher whole life premiums, projecting the side fund you could build over time.
Term insurance covers a set number of years at a much lower premium than permanent whole life, which builds cash value but costs far more. The strategy invests the annual difference between the two premiums at an assumed return, showing the separate side fund you accumulate. Over a long horizon that fund can grow to a meaningful amount, which is the core argument for choosing term. This calculator isolates the premium gap and compounds it, so you can see the trade-off clearly.
Whole life provides lifelong coverage, a guaranteed cash value, and some tax advantages that a simple side fund does not replicate. Term coverage ends when the term expires, and renewing later can be costly or unavailable. Investment returns are not guaranteed, and the side fund is exposed to market risk while whole life values are more stable. Use this as an illustration, not financial advice, and weigh your health, goals, and need for permanent coverage.
Term only covers a fixed period and builds no cash value, so nearly all of the premium pays for pure death benefit protection. Whole life costs more because it lasts your whole life and accumulates value.
No, the side fund depends on actual investment returns, which vary and can be negative in some years. Whole life offers guarantees that this comparison does not capture.
Coverage stops unless you renew or convert, and premiums at older ages or with health changes can be much higher. Many people plan for term to end once savings and obligations have shrunk.
See the exact formula and a worked example on our methodology page.