Term vs. Whole Life Comparison

The comparison, honestly

Whole life bundles a death benefit with a savings/investment component (cash value) that grows at guaranteed + dividend rates. Term life is pure insurance for a defined period with no cash value. The classic Buy-Term-Invest-The-Difference (BTID) argument: term costs 10–15× less per dollar of coverage, so if you invest the premium difference in low-cost index funds at market returns, you end the term with substantially more money than whole life's cash value.

The math heavily favors BTID when the buyer actually invests the difference. In practice most people don't — whole life is behavioral commitment device dressed as an investment product. If you know you'll spend the premium savings instead of investing them, whole life may end up with more assets. This calculator assumes you invest the full difference.

When each product genuinely fits

Term: temporary needs (mortgage payoff, income replacement while raising kids), young families with limited budget, anyone who wants insurance decoupled from investment decisions. Whole life: estate planning at high net worth (permanent coverage for estate liquidity), business buy-sell agreements, disciplined savers who value the forced-savings mechanism and tax-deferred cash value growth, or anyone with income too high for other tax-advantaged accounts (rare).

What happens after term expires

A term policy just ends. If you still need coverage, you buy new (much more expensive at older ages) or convert to permanent (typically an option in the first 5–10 years). Whole life continues for life as long as premiums are paid. This calculator stops at the end of the term — it does not model what you do next.