Last reviewed: October 2026 · By the SmartCoverage Editorial Team · How we research
Term life covers you for a fixed period, usually 10 to 30 years, and pays only if you die in that time. Whole life covers you for life and builds cash value, but costs far more: for a 30-year-old man, MoneyGeek’s 2026 averages are about $36 a month for $500,000 of 20-year term against about $444 a month for the same amount of whole life, more than 12 times as much.
For most people buying life insurance to protect a family’s income, term is the better fit. Whole life makes sense in a narrower set of situations, covered below, along with a calculator to test the classic “buy term and invest the difference” strategy.
The key differences at a glance
- How long it lasts: term ends after the chosen period; whole life lasts as long as you keep paying.
- Price: whole life costs many times more for the same death benefit, about 7 to 13 times in MoneyGeek’s examples below, depending on age and sex.
- Cash value: whole life builds a cash value that grows at a guaranteed rate set by the insurer, which you can borrow against. Term has none.
- Premiums: both usually stay level. Renewing a term policy after it ends is much more expensive.
- Flexibility: many term policies can be converted to permanent coverage without a new medical exam, within a set window.
What each costs at different ages
| Age | Term (20-year) | Whole life | Whole life costs |
|---|---|---|---|
| 25, female | $28 | $310 | 11x more |
| 30, male | $36 | $444 | 12x more |
| 40, female | $46 | $605 | 13x more |
| 50, male | $128 | $1,146 | 9x more |
| 60, female | $250 | $1,738 | 7x more |
The gap narrows with age because term gets much more expensive as you get older, while whole life is already priced for a lifetime. That is also why buying term young, and for long enough, matters: renewing or buying a new policy at 60 can cost several times what the same coverage cost at 40. Our guide to life insurance cost by age shows how fast prices rise.
Buy term and invest the difference?
The usual argument for term is that you buy it and invest what you would have spent on whole life. Here is what that looks like with your numbers:
Term and invest the difference: run your own numbers
For $500,000 of coverage, see what happens over 20 years if you buy term and invest what you would have paid extra for whole life, compared with the whole life premiums you would pay in.
Premiums are prefilled with MoneyGeek’s September 2026 averages for $500,000 of coverage (20-year level term vs whole life, nonsmokers in average health); replace them with your own quotes. Returns are an assumption, not a forecast, and investments can lose value. Whole life cash value is set by each policy and is usually well below premiums paid in the early years; check your illustration. Taxes and fees are ignored. For guidance only.
The strategy only works if you actually invest the difference every month for decades, and if you no longer need life insurance when the term ends. If either is in doubt, the comparison changes. Whole life’s forced saving and guarantees are worth something to people who would not invest on their own, but they come at a high price.
Which one fits you?
- You need cover for a set period, such as until the kids are grown or the mortgage is paid
- You want the most coverage for the lowest price
- You would rather invest separately for retirement
- Your budget is tight
- You need cover that lasts your whole life, for example for a dependent with special needs or to pay estate costs
- You have already maxed out tax-advantaged retirement accounts
- You value guaranteed cash value and fixed premiums over investment growth
- You can comfortably afford premiums several times higher, for decades
Three myths worth clearing up
“Term is wasted money if you do not die.” So is car or home insurance if nothing happens. You are paying for protection during the years your family depends on your income.
“Whole life is a good investment.” It is a guaranteed savings feature attached to insurance. The guarantees are real, but returns are typically modest, early surrenders can return less than you paid, and cash value left at death generally goes to the insurer, not your beneficiaries, on a standard policy.
“You can always buy whole life later.” Only if your health allows it. A term policy with a conversion option protects that choice without a new medical exam.
Before choosing either, work out how much coverage you need with our life insurance calculator, and compare insurers in our best life insurance companies guide.
Quick answers
Can I have both?
Yes. Some people buy a large term policy to protect their family while the children are young, and a small whole life policy to cover final expenses for life. It costs much less than putting all the coverage into whole life.
What about universal life?
Universal life is another type of permanent insurance with more flexible premiums and a cash value that can earn interest or market-linked returns. It can cost less than whole life but has fewer guarantees, so read the policy illustration carefully.
Sources
- MoneyGeek: Term life vs whole life insurance (updated September 14, 2026)
- NerdWallet: Term life vs whole life insurance (rates as of February 2026)
- NAIC: Life insurance consumer information
This guide is for informational purposes only and is not insurance, investment or tax advice. Premiums are averages and your price depends on your age, health and insurer. Investment returns are not guaranteed. Consider speaking to a licensed agent or financial adviser before buying.