Term life covers a set number of years for a lower premium. Whole life lasts for life and builds cash value, for a much higher premium. The honest comparison uses your own quotes, so this calculator asks for both premiums and shows what the difference could grow to if you invested it.
By Amara Taylor · Last updated October 13, 2026 · Uses your premiums, not ours. Anchor AI Tools does not sell insurance.
Descriptions follow NAIC consumer guidance on term and cash value life insurance.
Neither in general. Term usually costs far less for the same death benefit and suits a need that ends, such as raising children. Whole life suits a need that lasts for life, or someone who values a guaranteed policy and cash value over the lower premium. Which fits depends on how long your family needs the cover and what you can keep paying.
| After | Term paid | Whole paid | Difference invested |
|---|---|---|---|
| – | |||
Premiums paid at the start of each year; the difference is invested at the same time and grows at your rate. No tax on gains is modelled. See methodology and update log.
NAIC’s consumer guide uses a 35-year-old buying a $100,000 death benefit, with a whole life premium of $1,800 a year against a term premium of $250. Its premiums are an illustration, not current market prices. The table assumes the $250 term premium stays level for 20 years and the $1,550 difference is invested every year.
| Return on the difference | Term premiums, 20 years | Whole life premiums, 20 years | Invested difference after 20 years |
|---|---|---|---|
| 3% a year | $5,000 | $36,000 | $42,899 |
| 5% a year | $5,000 | $36,000 | $53,815 |
| 7% a year | $5,000 | $36,000 | $67,991 |
To finish the comparison, set the invested pot against the whole life policy’s cash value at year 20 from its illustration.
Two things that table cannot show matter just as much. After 20 years the term buyer has the pot but no cover, and buying new cover at 55 costs more and depends on health. The whole life buyer still has a $100,000 death benefit. NAIC also points out that the plan only works if the difference really is invested, not spent.
Before buying either, read the policy illustration and ask a licensed agent to explain the guaranteed and non-guaranteed columns.
Many term policies can be converted to a cash value policy during a conversion period, even if your health has changed, according to NAIC. The new premium will be higher. Check the conversion terms before you buy the term policy.
Work out the amount first, then compare policy types for that amount. The full coverage needs analysis runs three methods side by side.
Long enough to cover the years your family relies on your income. The guide how long term life insurance should be sets out a timeline method.
Estimate for planning and learning. Not insurance, financial, tax or legal advice, and not a quote. The calculator uses only the premiums and return you enter. Anchor AI Tools does not sell insurance or collect your details for leads. See the disclaimer and our editorial standards.
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Last updated: October 13, 2026 · Written and tested by Amara Taylor, Content Lead, Anchor AI Tools. Not yet reviewed by a licensed life insurance professional.