Term vs Whole Life Insurance — Simple Comparison
| Feature | Term Life | Whole Life |
|---|---|---|
| Coverage Period | 10, 20, or 30 years | Entire lifetime |
| Monthly Cost (30yr, $500K) | $25-40 | $250-400 |
| Cash Value | No | Yes (grows slowly) |
| Investment Component | No | Yes (low returns) |
| Best For | Income replacement | Estate planning |
The Buy Term and Invest the Difference Strategy
Term insurance for a 30-year-old costs roughly $30/month vs $300/month for whole life (both for $500,000 coverage). If you invest the $270 difference in an index fund at 10% for 30 years, you would have $593,000 — more than the death benefit!
For 90% of people, term life insurance is the right choice. Get coverage for 10-15x your annual income, for a term that covers your working years.