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Insurance
Term vs Whole Life Compare Calculator
See how much portfolio wealth you accumulate by choosing low-cost Term Life and investing the premium savings.
Inputs
Affordable pure coverage
Higher permanent rate
Expected index fund return
Policy term duration
Results
Accumulated wealth by investing difference
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Monthly premium savings—
Total out-of-pocket saved—
Investment growth gain—
Time horizon—
Strategy: "Buy Term and Invest the Difference". Compounded monthly at your target return rate.
How this calculator works
Compares the financial outcomes of purchasing low-cost Term Life insurance and investing the premium savings versus buying permanent Whole Life insurance.
Formula
Premium Difference = Whole Life Premium - Term Life Premium; Investment Growth = Compound Return of Premium Savings over Term Period
Worked Example
Whole life premium = $3,000/yr vs 20-Year Term premium = $400/yr ($2,600 difference). Investing $2,600/yr at 7% return over 20 years accumulates $106,589, frequently outperforming whole life guaranteed cash values.
Assumptions
- Policyholder consistently invests 100% of premium savings into index funds or compound growth assets.
- Term policy remains active throughout the comparison period.
Limitations
- Excludes whole life dividend participation variations, policy loan interest rates, and tax-deferred cash value surrender terms.
Disclaimer: Educational estimate only. Mutual fund returns fluctuate. See our Disclaimer.