For most families, life insurance does one job, replacing your income while others depend on it. Term life covers those years for a small fraction of what whole life charges for the same death benefit. Buy a term policy that runs until your kids are grown or the mortgage is paid, and invest what you save.
In MoneyGeek’s 2026 rate analysis, a 35-year-old male nonsmoker in average health paid about $40 a month for $500,000 of 20-year term coverage. Whole life with the same death benefit ran about $545 a month, nearly 14 times the term policy’s $40, for coverage that lasts for life and a savings account inside the policy.
That savings account is called cash value, and you pay for it on top of the insurance. The insurance is the part your family needs, and for most people that need ends. Once the kids are grown, the mortgage is paid, and your savings could support a surviving spouse, nobody depends on your paycheck. The cash value side is slow to start, too. The National Association of Insurance Commissioners’ buyer’s guide notes that in some policies it stays low in the early years and builds later.
Match the term to the years your income is needed, such as until your youngest child finishes school or the mortgage is paid off. Then invest the premium you didn’t spend. Invested for 20 years at an assumed 6% average annual return, before taxes, the $505 monthly difference from the example above would grow to about $233,000, by our math. The whole life policy would hold cash value by then too, but MoneyGeek notes that index fund returns have generally outpaced whole life cash value growth. Automate the transfer into a 401(k), IRA, or brokerage account so the difference actually gets invested.
Permanent coverage earns its cost only when the need is permanent too, such as a child who will depend on you for life or an estate large enough that heirs will need cash to settle it. The NAIC’s guide likewise notes that whole life premiums, though higher at first, are smaller than you’d eventually pay to keep renewing term into your later years.
Insure the years people depend on you, and let your investments cover the rest.
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