Insurance
Term life covers a deadline (kids, mortgage) cheaply. Whole life bundles insurance with a cash-value account that is usually an expensive way to invest. Most households should buy term and invest the difference.
Updated 2026-09-08 · 9 min read
Life insurance exists so a person who depends on your paycheck is not wrecked if you die. Term life does only that job, for 10, 20, or 30 years, at a price most households can actually pay.
Whole life adds a cash-value account. You overpay relative to term; the extra is supposed to grow tax-deferred. First-year commissions, surrender charges, and illustrated (not guaranteed) returns are why 'invest the difference' exists.
Price a 20-year $750k term policy. Price a whole-life illustration for similar death benefit. Subtract. Invest that monthly gap in a target-date or total-market fund. After 20 years, most households have more liquid wealth in the brokerage than in the policy cash value.
Exceptions: a maxed-out high earner, estate liquidity, or a buy-sell agreement. Those are planner conversations, not a kitchen-table default.
Level term, 20 or 30 years, highly rated carrier, enough to cover the years someone else needs your income. Recheck after a child, a house, or a raise. Employer group term vanishes if you leave the job.
Not a scam. It is a product with high commissions, slow early cash value, and returns that often lose to cheap term plus an index fund. It can make sense for a few high-income estate or business cases — not as a default savings vehicle.
A common starting range is 10–15× after-tax income, or enough to cover the years until dependents are independent and the mortgage is gone. Subtract savings and employer coverage, then buy 20- or 30-year level term.
That is the point of a declining need. Convertible term is a backup if health changes and you must keep coverage.
Educational only. Verify IRS limits and loan quotes before acting.