US 2028 Term vs Cash Value
2028 BTID: term life premium << cash value. Invest difference at 7% = wealth growth far exceeds cash value internal rate of return.
| Annual invested difference | — |
| BTID wealth at end | — |
| Cash value wealth at end | — |
| Winner | — |
| Wealth advantage | — |
Buy-Term-Invest-Difference (BTID) strategy: buy cheap term life (1-2% of cash value premium), invest the difference in index funds. Over 20-30 years, BTID almost always builds more wealth than cash value (whole life, universal life). Cash value internal IRR typically 3-5% vs S&P 500 historic 9-10%.
Cash Value Internal IRR Hidden
Cash value premium includes: insurance cost + administrative load + commission + 'savings' component. Internal rate of return on the savings portion typically 3-5% after fees. Often below inflation. Worse than HSA, 401(k), index fund alternatives.
Term Life Math
30-year-old non-smoker: $1M 20-year term = $300-$500/year. Same coverage whole life: $8,000-$12,000/year. Difference $7,500/year invested at 7% over 20 years = $328,000. Cash value of whole life policy at year 20: typically $150,000-$200,000.
When Cash Value Wins (Rare)
Estate tax planning for ultra-high-net-worth (over $30M). Some second-to-die policies for liquidity. Most retail buyers don't benefit. Insurance industry pushes cash value via commission incentives.
Last updated May 2026. Sources: III.