Term life insurance costs less than whole life for the same death benefit — the classic “buy term and invest the difference” strategy invests what’s saved on premium instead of letting a whole life policy accumulate it internally as cash value.
How it works
The annual premium difference between the two policies is projected forward as an invested amount, using the same future-value math this site’s savings goal calculator uses. That projected figure is then compared directly against the whole life policy’s own illustrated cash value at the same year — entered from the actual policy illustration rather than modeled, since a real product’s internal costs aren’t a single public formula.
What this doesn’t capture
Whole life’s guaranteed death benefit and cash value are contractually guaranteed in a way an investment account isn’t, and a term policy expires with no value if outlived and not renewed — a full comparison also has to weigh certainty and lifetime coverage, not just the two dollar figures here.
How to use this calculator
- Enter both policies’ annual premiums and the years being compared.
- Enter an expected investment return and the whole life policy’s illustrated cash value at that year.
Frequently asked questions
Why not model whole life cash value directly?
Its growth depends on the specific insurer’s costs, guarantees and dividend practices — details only the policy’s own illustration actually reflects accurately.
Does the invested amount account for investment fees or taxes?
No — it’s the raw future value at the return rate entered; real investment costs and any taxable gains would reduce the actual amount realized.
Is the invested side always ahead of the cash value?
Not necessarily — it depends heavily on the investment return achieved versus the premium gap and the specific policy’s cash value growth; this calculator shows the comparison for whatever numbers are entered, not a general rule.
