Term $300/yr vs Whole Life $3,000/yr Over 20 Years at 6%
Compare buying term life insurance at $300/year versus whole life at $3,000/year and investing the $2,700 difference at 6% over 20 years.
How to use this tool
- Get quotes for comparable term and whole life policies with the same death benefit.
- Enter both annual premiums and the comparison period (usually the term length).
- Set a realistic investment return for the premium difference.
- Compare the invested difference against the whole life policy's projected cash value.
This calculator shows how much the $2,700 annual premium difference between a $300 term policy and a $3,000 whole life policy would grow if invested at 6% over 20 years.
Frequently asked questions
- Is term or whole life better?
- For most families seeking the largest death benefit per dollar, term wins. Whole life makes sense if you want guaranteed lifelong coverage, a forced-savings vehicle, or specific estate-planning benefits — and can afford the much higher premium.
- Does this include the whole life policy's cash value?
- No. It shows what the premium difference could grow to in a separate investment. To complete the comparison, weigh this figure against the policy's projected (non-guaranteed) cash value.
- What return rate should I assume?
- Use a realistic long-run figure for a diversified portfolio — many planners model 5% to 7% after inflation. Lower assumptions narrow the gap between the two approaches.