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CalcTortoise

Savings Policy vs Term + Invest

A life policy with a savings element, or cheap term cover and investing the rest? Compare both for the same yearly cost.

Written by the CalcTortoise editorial team · How we work

Savings life policy

years
years

Term cover + invest the difference

Get a quote for your age and health.

For example an index fund, after taxes and fees.

Term + invest ahead after 25 years by

$90,551

The savings policy gives a yearly return of only 2.58% on your premiums. With a term plan and the rest invested at 6%, after 25 years you would have $240,551 instead of $150,000, and life cover of $250,000 instead of $250,000.

Savings policy: pays at the end
$150,000
Term + invest: invested
$240,551
Savings policy: real yearly return
2.58%
Total premiums
$100,000
Life cover, savings policy
$250,000
Life cover, term + invest
$250,000

Illustration only, not investment, tax or legal advice.

Value over the yearsTerm + invest: investedSavings policy (growing at its own 2.6%)

Year by year

YearTerm + invest: investedLife cover, term + investLife cover, savings policy
Year 1$4,929$254,929$250,000
Year 2$10,154$260,154$250,000
Year 3$15,692$265,692$250,000
Year 4$21,562$271,562$250,000
Year 5$27,785$277,785$250,000
Year 6$34,381$284,381$250,000
Year 7$41,373$291,373$250,000
Year 8$48,785$298,785$250,000
Year 9$56,641$306,641$250,000
Year 10$64,968$314,968$250,000
Year 11$73,795$323,795$250,000
Year 12$83,152$333,152$250,000
Year 13$93,070$343,070$250,000
Year 14$103,583$353,583$250,000
Year 15$114,727$364,727$250,000
Year 16$126,540$376,540$250,000
Year 17$139,061$389,061$250,000
Year 18$152,334$402,334$250,000
Year 19$166,403$416,403$250,000
Year 20$181,316$431,316$250,000
Year 21$191,824$441,824$250,000
Year 22$202,963$452,963$250,000
Year 23$214,769$464,769$250,000
Year 24$227,285$477,285$250,000
Year 25$240,551$490,551$250,000

How to use this calculator

  1. Enter the policy premium, the years of premiums and the value shown for the end of the term.
  2. Enter a term cover quote for the same years.
  3. Set the return you expect on the money invested.

Frequently asked questions

What return does the policy really give?

Paying $5,000 a year for 20 years for $150,000 after 25 years is 2.58% a year on the premiums.

Is term cover plus investing better?

In the example, term cover of $250,000 plus investing at 6% leaves $240,551 after 25 years, against $150,000 from the policy.

What if returns are lower?

At 5% a year, term plus investing ends with $204,018.

Sources and method

Standard compound-interest formulas, tested against worked examples. Nothing here depends on outside data; the rates you type in are your own assumptions.

No outside data is used. The numbers you type in are the only inputs.

Page and formula last reviewed . How we calculate · Editorial policy · Corrections and change log

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Last updated 10 October 2026. For information only — not financial advice. Check the final figures with your lender or bank.