Term vs Whole Life Insurance Calculator
Compare the total cost of term life insurance vs whole life insurance over time, including the "buy term, invest the difference" strategy.
Did this tool work for you?
How to use this calculator
The future value of investing the monthly premium difference uses the standard annuity-due formula compounded monthly, where PMT is the monthly difference, r is the monthly rate, and n is the total months.
- 1
Enter your desired coverage amount, current age, and the term length you are comparing (e.g. 20 years).
- 2
Enter the monthly premium quotes for both the term policy and the whole life policy from your insurer.
- 3
Set an expected annual investment return to see how much the premium difference could grow if invested instead.
Frequently asked questions
What exactly does this calculator add up?
It multiplies each monthly premium by 12 and by the term length to get a total paid for the term policy and for the whole life policy over the same number of years. The gap between the two is shown as the extra cost of whole life. With the defaults ($30 and $350 a month for 20 years) that is $7,200 against $84,000, a gap of $76,800.
How is the future value of the premium difference worked out?
This tool uses the annuity-due formula FV = PMT × ((1 + r)^n − 1) / r × (1 + r), where PMT is whole life premium minus term premium, r is the annual return divided by 12 and n is term years × 12. Each deposit is assumed to be made at the start of the month and the return is assumed to be constant, with no tax, fees or market ups and downs. At the defaults, $320 a month at 7% for 20 years comes to $167,669.
What if the return is 0% or left blank?
At 0% the formula is replaced by a plain sum, monthly difference × months, so $320 for 10 years gives exactly $38,400, the same as the extra premiums paid. Clearing the return box counts as 0% too, so it gives the same result. A negative return is also treated as 0%, so the tool cannot show investment losses.
What happens if the whole life premium is lower than the term premium?
The invested difference is floored at zero, so the future value shows $0 and the monthly difference shows $0. The extra-cost line is not floored, so it can show a negative number, meaning the whole life policy cost less over the term. For example $20 whole life against $30 term for 20 years shows -$2,400.
Do the coverage amount and age change the result?
Not the arithmetic. The coverage amount is only repeated in the results, and your age is used only to show the age at which the term ends (age plus term years). Premium quotes are what drive the totals, so enter the real quotes you were given for the same coverage amount on both policies.
What does the model leave out about whole life?
It does not model cash value, dividends, policy loans, surrender charges or the death benefit that continues after the term ends. It also assumes both premiums stay level for the whole term. The output therefore compares premiums paid against a hypothetical investment, not the two products as a whole.
Does it say whether term or whole life is the better choice?
No. The invested-difference figure depends entirely on the return you type in, and the tool does not know what your policy would actually be worth. It is not a quote, and it does not replace the illustration a licensed agent or insurer provides, which governs the real terms.
Term vs whole life — premiums paid against a hypothetical invested difference
The comparison the calculator makes
Two monthly premium quotes go in, and the tool totals what each policy would cost across the term you pick. It then asks a single what-if question: if the extra amount charged for whole life were instead deposited every month at the return you enter, what would that pot be worth when the term finishes? The coverage amount you type is only echoed back, and your age is used only to show the age at which the term ends. Everything else is premium arithmetic.
How the invested figure is built
The monthly difference is the whole life premium minus the term premium, floored at zero. The tool treats it as a series of deposits at the start of each month, grows them at the annual return divided by twelve, and applies the annuity-due formula FV = PMT × ((1 + r)^n − 1) / r × (1 + r). The rate is assumed constant, and no taxes, fund fees or years of poor returns are included. When the return is zero it simply multiplies the difference by the number of months.
Three runs of the calculator
The table compares three input sets and the figures the tool returned for each. The second row lengthens the term to 30 years, widens the premium gap and lowers the return to 5%. The third keeps the default premiums but shortens the term to 10 years and sets the return to zero, so the future value equals the extra premiums paid.
| Inputs (term / whole life monthly, years, return) | Term total | Whole life total | Monthly difference | Future value of difference |
|---|---|---|---|---|
| $30 / $350, 20 years, 7% | $7,200 | $84,000 | $320 | $167,669 |
| $45 / $500, 30 years, 5% | $16,200 | $180,000 | $455 | $380,256 |
| $30 / $350, 10 years, 0% | $3,600 | $42,000 | $320 | $38,400 |
Reading those results
In the second row the tool shows an extra whole life cost of $163,800, which is the $455 monthly difference paid for 360 months. The $380,256 future value is what that same stream would reach at a steady 5% under the formula. The first row shows how a higher return widens the gap between money paid in and money accumulated: $76,800 of extra premiums becomes $167,669 at 7%. These are model outputs from the numbers you enter, not forecasts of any policy or investment.
What the model cannot tell you
Whole life has features the arithmetic ignores: a cash value, a death benefit that does not end with the term, and the option to borrow. Term coverage in this tool simply stops at the end of the term. Premiums are assumed level, and no claim is made about which product is better. Use real illustrations from a licensed agent or the insurer, whose policy terms govern, to see what a specific policy would deliver.
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →