Buy Term & Invest the Difference vs. Permanent Insurance
A neutral, hypothetical comparison of the wealth-accumulation side of two strategies: buying term life insurance and investing the premium difference, versus paying a permanent policy's premium and letting its cash value accumulate.
Term + invest the difference
$139,385
Permanent policy cash value
$132,264
Annual amount invested (the difference)
$3,400
How it works: the difference between the two premiums is invested annually at your assumed return; the permanent policy's full premium is assumed to accumulate cash value at a separate, net-of-charges rate you supply. Both use the same compounding math — only the amount and rate differ.
What this doesn't show: this is a wealth-accumulation comparison only. It doesn't model the death benefit either policy provides throughout the period, what happens if a term policy expires while still needed, or what happens if the insured dies before the invested difference has grown to match the coverage amount. Real permanent-policy performance depends on the specific insurer, contract charges, and non-guaranteed elements — this uses one assumed rate you control, not a real product's illustration.
Educational illustration only, for general financial literacy purposes — not an insurance or investment recommendation. See the Term vs. Permanent Life Insurance lesson for the underlying concepts.
Sources & further reading