Case design · estimate

Term versus permanent

Three plain questions: what does each policy cost, what does the premium difference grow to if it is invested instead, and what does the family receive either way? Whole life is a fixed product, so the default side fund is a fixed one too.

Term premium$/ monthPermanent premiumwhole life or another fixed policy$/ monthDeath benefit at the startsame on both, 0 to skip$Years to compare20 yrsshown every 5 yearsTerm level period20 yrsthe death benefit ends after this

Invest the difference inlike for like with a fixed policy

Fixed rate on the differencebond or CD yield% a year

Tax ratefixed: each year. market: on gains%

The permanent policy over time

Permanent death benefit and cash valueevery 5 years, from the carrier

Permanent death benefit growsdividends, paid up additions. 0 = level% a year

Illustrated cash value, last yearfrom the carrier, optional$

Your estimate

Paid for term, 20 years

$14,400

$60 a month. Pure cost of protection: nothing comes back if the insured outlives the term.

Paid for permanent, 20 years

$108,000

$450 a month. Part of it builds the policy's cash value.

Extra paid for permanent

$93,600

$390 a month more than term, for 20 years. This is the money the term buyer is assumed to invest instead.

That extra, invested instead, by year 20

$136,789

After tax, what the term buyer keeps. In a fixed vehicle (bonds, CDs) at 4.5%, after 20% tax on the interest each year. Before tax: $151,369.

Family receives, term path, year 20

$636,789

$500,000 death benefit plus the invested difference after tax

Family receives, permanent, year 20

$500,000

the death benefit, level, for life while premiums are paid

difference invested, after taxfamily receives, term pathfamily receives, permanent

Tap or drag across the chart to read any point.

Side by side, every 5 years

Year	Paid, term	Paid, permanent	Difference invested, after tax	Family gets, term path	Family gets, permanent
5	$3,600	$27,000	$25,596	$525,596	$500,000
10	$7,200	$54,000	$56,232	$556,232	$500,000
15	$10,800	$81,000	$92,901	$592,901	$500,000
20	$14,400	$108,000	$136,789	$636,789	$500,000

Over 20 years the permanent policy costs $108,000 and the term policy $14,400. The term buyer has $390 a month left over; put in a fixed vehicle (bonds, CDs) at 4.5%, that is about $136,789 after tax by year 20. If the insured dies in year 20, the family receives $636,789 on the term path and $500,000 from the permanent policy. The table shows the same comparison every 5 years; type in the illustration to set the permanent side year by year.

An estimate under the assumptions listed, computed on this page from what you typed. Not a projection, a quote, an illustration or a guarantee. Educational content only. Nothing here is individual financial, tax, insurance or legal advice, and nothing here is an offer or a recommendation of any product or strategy. Rates, tax rules and product terms change; check them before you rely on a number. BlackCase App is a software product that connects people with licensed financial professionals. It is not an insurance company, a broker-dealer, or a registered investment adviser.

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