The math that ends the debate.
Updated March 2026
Term life: $25/month for $500k coverage. Whole life: $350/month for the same coverage. The $325/month difference invested at 7% for 20 years grows to $170,000+. Run the numbers for your age and coverage below.
Your Situation
Age 20-60. Rates are estimates for healthy non-smoker.
7% is the historical S&P 500 real return (inflation-adjusted).
Term Life — Monthly Premium
$25/mo
Covers you for 20 years then expires
Whole Life — Monthly Premium
$350/mo
Permanent coverage + cash value
Monthly Difference (whole life minus term)
$325/mo extra
Over 20 years you pay $78,000 more for whole life
If you invest the $325/month difference at 7% annually:
$169,301
after 20 years
This is the "buy term and invest the difference" strategy. For 99% of households, the math overwhelmingly favors term life.
Total premiums paid over 20 years
Why agents push whole life
Whole life pays insurance agents 50-100% of the first year premium in commission. On a $350/month policy, that is $2,100-$4,200 in year one alone. Term life pays 30-50%. The product that makes your agent the most money is rarely the one that is best for you.
Frequently Asked Questions
Is whole life insurance ever worth it?
Yes, in narrow circumstances. Whole life makes sense for ultra-high net worth estate planning to pay estate taxes, for business buy-sell agreements where permanence matters, and for people who have maxed out every other tax-advantaged account (401k, IRA, HSA) and want another tax-deferred vehicle. For the other 99% of people, term life and investing the difference produces better outcomes.
What is 'buy term and invest the difference'?
It's a strategy popularized by Dave Ramsey and personal finance experts. Buy cheap term life insurance for the coverage you need. Take the money you would have spent on more expensive whole life premiums and invest it in low-cost index funds. The investment returns on that difference typically far outpace the cash value growth inside a whole life policy.
How much term life insurance do I need?
A common rule is 10-12 times your annual income. The goal is to replace your income for your dependents if you die. Cover your mortgage balance, your income for the years until your kids are independent, and any debts. A 30-year-old earning $80,000 with a $300,000 mortgage and two kids might need $1,000,000 in coverage, which costs around $50/month on a 20-year term.
What happens when term life insurance expires?
It expires with no payout. That is by design. Term life covers you through your high-risk years when dependents rely on your income. By the time a 20-year or 30-year term expires, your mortgage is paid, your kids are independent, and your retirement savings should be large enough that your spouse doesn't need a death benefit to maintain their standard of living.