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Whole Life vs. Term + Invest

Is whole life worth it, or should you buy term and invest the difference? Compare both for the same out-of-pocket cost each year.

Written by the CalcTortoise editorial team · How we work

Whole life policy

years
years

Term life + invest the difference

Get a quote for your age and health.

For example an index fund, after taxes and fees.

Term + invest ahead after 30 years by

$222,254

The whole life gives a yearly return of only 3.54% on your premiums. With a term plan and the rest invested at 7%, after 30 years you would have $472,254 instead of $250,000, and life cover of $500,000 instead of $500,000.

Whole life: pays at the end
$250,000
Term + invest: invested
$472,254
Whole life: real yearly return
3.54%
Total premiums
$120,000
Life cover, whole life
$500,000
Life cover, term + invest
$500,000

Illustration only, not investment, tax or legal advice.

Value over the yearsTerm + invest: investedWhole life (growing at its own 3.5%)

Year by year

YearTerm + invest: investedLife cover, term + investLife cover, whole life
Year 1$5,939$505,939$500,000
Year 2$12,293$512,293$500,000
Year 3$19,092$519,092$500,000
Year 4$26,367$526,367$500,000
Year 5$34,151$534,151$500,000
Year 6$42,480$542,480$500,000
Year 7$51,392$551,392$500,000
Year 8$60,928$560,928$500,000
Year 9$71,131$571,131$500,000
Year 10$82,049$582,049$500,000
Year 11$93,731$593,731$500,000
Year 12$106,231$606,231$500,000
Year 13$119,605$619,605$500,000
Year 14$133,916$633,916$500,000
Year 15$149,229$649,229$500,000
Year 16$165,613$665,613$500,000
Year 17$183,145$683,145$500,000
Year 18$201,903$701,903$500,000
Year 19$221,975$721,975$500,000
Year 20$243,452$743,452$500,000
Year 21$260,012$760,012$500,000
Year 22$277,731$777,731$500,000
Year 23$296,691$796,691$500,000
Year 24$316,978$816,978$500,000
Year 25$338,685$838,685$500,000
Year 26$361,911$861,911$500,000
Year 27$386,763$886,763$500,000
Year 28$413,355$913,355$500,000
Year 29$441,809$941,809$500,000
Year 30$472,254$972,254$500,000

How to use this calculator

  1. Enter the whole life premium, years of premiums, and the cash value shown in the illustration for a given year.
  2. Enter a term life quote for the same years: coverage and annual premium.
  3. Set the return you expect on the money invested.

Frequently asked questions

What return does whole life really earn?

Paying $6,000 a year for 20 years for a cash value of $250,000 after 30 years is a return of 3.54% a year on your premiums.

Is buying term and investing the difference better?

In the example, term coverage of $500,000 plus investing the difference at 7% leaves $472,254 after 30 years, against a cash value of $250,000.

What if returns are lower?

At 5% a year, term plus investing ends with $307,932.

When can whole life make sense?

For lifelong needs such as estate planning or a dependent who needs support for life, or for people who have already maxed out other tax-advantaged accounts. Compare the illustration carefully: guaranteed and non-guaranteed values differ.

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.