Buy term and invest the difference vs whole-life cash value over your horizon.
Term wealth uses the future-value-of-annuity formula on the monthly premium difference at the assumed return. Whole-life cash value is a linear approximation: death_benefit × min(1, t / maturity_years) × cash_value_pct. Real policies vary; surrender charges, dividends, and tax treatment can shift the comparison materially. The death-at-half scenario shows what each strategy pays out if the insured dies halfway through the horizon.
Few personal-finance debates are older or more polarized than term versus whole-life. On one side, fee-only planners and consumer advocates repeat a slogan distilled in the 1970s: buy term and invest the difference. On the other, captive-agency life-insurance brands sell whole-life policies as a hybrid of insurance, forced savings, and tax-advantaged estate-planning vehicle. Both sides have a point, both sides also have a sales pitch, and the truth for any given household sits at the intersection of three numbers nobody can know with certainty in advance: how long the insured will live, what real return the invested premium difference will earn, and how the policy's cash value will actually behave decade by decade. This calculator does not pretend to answer those unknowables. It asks you to declare them, then runs the comparison cleanly so you can see what the math says under your assumptions — and, more importantly, see how fragile the answer is when those assumptions move by one or two percentage points.
The term-side leg uses the future-value-of-an-ordinary-annuity formula. If you would pay PMT euros each month into a brokerage account (PMT = whole-life premium − term-life premium), at a constant monthly return r = annual_return ÷ 12 ÷ 100, over n = horizon_years × 12 monthly contributions, the balance at the horizon is:
FV = PMT × ((1 + r)ⁿ − 1) ÷ r
When r = 0 (a saver who only beats inflation by parking the difference in cash) the formula collapses to FV = PMT × n. Either way, total invested = PMT × n, and growth = FV − total_invested.
The whole-life leg uses a deliberately conservative linear approximation of cash-value accumulation:
cash_value(t) = death_benefit × min(1, t ÷ maturity_years) × cash_value_pct ÷ 100
So with a $500,000 policy, a 30-year maturity, and a 50 % cash-value-of-death-benefit factor, year 30 produces $250,000 of cash value while year 15 produces $125,000. Real whole-life policies do not accumulate this linearly — the curve is back-loaded — but the linear model is faithful enough for a comparison between strategies, especially given how much it overstates the early-year cash value (a generous handicap for the whole-life side).
The death-at-half scenario shows the morbid but essential alternative outcome: if the insured dies halfway through the horizon, the term strategy pays out the death benefit plus the invested-difference balance accumulated to that date, while whole-life pays out only the death benefit (cash value is generally absorbed by the carrier on death claims for traditional whole-life). This is where the buy-term-invest-the-difference camp gets most of its rhetorical force.
Enter the two monthly premiums you have actually been quoted (apples-to-apples on death benefit and underwriting class), the death benefit you need, and the comparison horizon — typically the number of years until the youngest dependent is financially self-sufficient, or until your mortgage is paid off, whichever is later. Pick an expected return that you would actually earn after fees and bad behavior; for most retail investors a 6–7 % nominal long-run figure on a diversified equity-tilted portfolio is defensible, while 4 % is a reasonable conservative case for a balanced mix or a less-disciplined saver. The two cash-value sliders let you stress-test the whole-life side: most US whole-life illustrations land between 40 % and 60 % of death benefit at 25–30 years, but participating policies can do better and non-participating ones often do worse.
Alice, 35, is quoted $30 / month for a 30-year level-term policy with a $500,000 death benefit, and $250 / month for a whole-life policy of the same face value. Difference: $220 / month, or $2,640 / year. Over 30 years she invests $2,640 × 30 = $79,200 of out-of-pocket cash. At a 7 % annual return compounded monthly the future value of that annuity is roughly $269,000 — the term-strategy wealth at year 30. The whole-life policy's cash value at year 30, under the linear 50 % model, is $250,000. Term wins by ~$19,000 alive at horizon. But drop the assumed return to 4 % (a savings-account-plus-bonds outcome) and the FV falls to about $153,000; whole-life now wins by roughly $97,000. The decision is that sensitive to the return assumption, which is exactly why this calculator surfaces it as a slider.
Five failure modes recur in real-world buy-term-invest-the-difference plans. First, the lapse problem. Most term policies sold are 20- or 30-year level term, but a household that buys at 35 and lives to 90 needs coverage well past the horizon — and renewing term life at 65+ is brutally expensive or impossible. If you outlive your term and still need coverage, you have effectively bought zero permanent insurance. Second, the discipline problem. The math only works if the difference actually gets invested every month. Behaviorally, the whole-life premium is forced savings; the brokerage transfer is voluntary, and many people skip it. Third, the policy-loan trap. Whole-life cash value can be borrowed against — but loans accrue interest, and an unpaid loan plus interest can erode the death benefit or trigger a taxable lapse. Fourth, surrender charges. Cash value in the first 10–15 years is heavily eaten by surrender charges and front-loaded commissions; cancelling a whole-life policy in year 5 typically returns far less than the linear approximation suggests. Fifth, the IUL/VUL bait-and-switch. Indexed and variable universal-life policies are sometimes sold as whole-life look-alikes with "upside potential"; they are riskier, capped, and usually charge participation rates that bring expected long-run cash growth below the term-and-invest path before fees.
This comparison is a US-flavored debate. In the United States, term life has become commoditized (online quotes, transparent pricing, cheap underwriting), making the term + brokerage path easy to execute, while whole-life is still aggressively marketed by captive agents on commission. France is fundamentally different: assurance-vie is not a death-benefit product — it is a tax-advantaged investment wrapper combining a euro-denominated guaranteed fund (fonds en euros) with optional unit-linked sub-funds (unités de compte). After 8 years the gains receive a 4,600 €/9,200 € annual exemption (single/couple) and a flat 7.5 % tax-plus-social-charges rate on amounts up to 150,000 €/year per insured; succession-planning rules under article 990 I CGI exempt up to 152,500 € per beneficiary on premiums paid before age 70. So the French analog of "whole-life cash value" is actually a savings vehicle, not a death-benefit policy. United Kingdom retains a niche for whole-of-life insurance specifically as inheritance-tax planning — a policy held in trust funds the IHT bill on death, sidestepping the 40 % rate on estates above the nil-rate band. Germany has Risikolebensversicherung (term) and Kapitallebensversicherung (capital life), with the latter losing favor since 2005 when the tax exemption on payouts was removed. The lesson across jurisdictions: the math in this calculator is structurally portable, but the tax wrapper around each leg can move the answer by tens of thousands of euros — never compare two products without checking what the local code does to the gains on each side.