Is buy term and invest the difference always better?

In most cases, yes. If you invest the premium difference in index funds at 7%, you typically accumulate far more than the cash value of whole life.

Are there cases where whole life makes sense?

Yes: high-income individuals who have maxed all tax-advantaged accounts, estate planning with an irrevocable life insurance trust, or those with no investment discipline who benefit from forced savings.

What is the internal rate of return on whole life cash value?

Typically 2-4% long-term — below most diversified investment portfolios. The insurance benefit and tax-deferred growth are the primary advantages over pure investment accounts.

Term vs Whole Life Insurance Cost Comparison

Compare the true cost of term life insurance plus investing the premium difference versus whole life insurance cash value accumulation over 20-30 years.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Compare the true cost of term life insurance plus investing the premium difference versus whole life insurance cash value accumulation over 20-30 years. Use the term vs whole life result to inform your calculation.

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Term vs Whole Life Insurance Cost Comparison

How to Use

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Frequently Asked Questions

Is buy term and invest the difference always better?

Are there cases where whole life makes sense?

What is the internal rate of return on whole life cash value?