Term insurance covers a specific period. Whole life covers your lifetime and builds cash value. They serve different purposes and cost very different amounts.
Term life
A healthy 35-year-old might pay roughly $30 a month for a $500,000 20-year term policy. There is no cash value; if you outlive the term, coverage ends. It is the most cost-effective way to protect a family during working years.
Whole life
Whole life premiums can be ten or more times higher for the same death benefit. Part of the premium builds guaranteed cash value that grows slowly and can be borrowed against. Fees and commissions can be high, and early cash value is low.
Which to choose
Most people are better served by term insurance plus investing the premium difference in retirement accounts. Permanent insurance can make sense for estate planning, special-needs dependents, business needs or people who have maxed out other tax-advantaged accounts.
Try the numbers
Use our Term vs Whole Life Insurance Calculator to see this in practice. With its default example (Term premium / yr: $600; Whole life premium / yr: $6,000; Whole life cash value at end: $190,000), it shows term + invest ahead by: $262,032. Adjust the inputs to match your situation.
Key takeaways
- Term is inexpensive and temporary; whole life is costly and permanent.
- Most families do best with term plus investing.
- Permanent policies fit specific planning needs.
This article is for general education and is not personalized financial, tax or legal advice. Rules and limits change; confirm current figures with official sources such as IRS.gov, SSA.gov and StudentAid.gov, or consult a qualified professional. © 2026 FinanzCalc.