Should You Really “Buy Term and Invest the Difference”?

Most financial experts recommend “buy term and invest the difference,” but this advice fails most families. Term premiums start low, about $30/month at age 40 for $500,000 coverage, but rise sharply to $150 - $400/month at age 60, and up to $800/month after 65. Most people drop coverage as it gets expensive, losing all benefits. Over a lifetime, the average person pays $10,000–$20,000 or more in term premiums and receives nothing if they outlive the policy.

As part of this mainstream strategy, people are told to put the “difference” (what you’d pay for whole life insurance premiums, for example) into 401(k)s, IRAs, CDs, bonds, and other investments, often spreading savings across multiple accounts and vehicles. But these assets are subject to market fluctuations, taxes, penalties, and are typically spent down in retirement. Average lifetime savings of $150,000 may experience exceptional growth throughout your life or they may experience periodic losses due to market downturns.

To finance major purchases, homes, cars, college, and other lifestyle needs, the traditional path uses bank loans and credit. Over a lifetime, the average American household pays between $225,000 and $415,000 in interest, not just on a mortgage, but also on car loans, credit cards, student loans, and other debts. All this interest goes to banks and lenders, siphoning wealth out of the household and leaving nothing behind. By retirement, the typical household has a net worth between $1.5 and $1.8 million, mostly in home equity and retirement accounts.

However, these assets are illiquid. Liquid cash in checking and savings accounts is often only $16,000 - $67,000. To access home equity, retirees must sell, refinance, or take a reverse mortgage. These are costly and inflexible options. Most pass away leaving an inheritance of around $300,000 or significantly less, and 65% - 80% die with no life insurance in force, so there is no guaranteed legacy for their heirs. This pattern doesn’t just diminish opportunities for individual families. It systematically erodes the aggregate wealth and capital base of an entire nation, undermining the very foundation of long-term economic prosperity.

By contrast, Whole Life Banking™ offers a radically different approach. Here, all savings and “interest” that would have been lost to banks are redirected into a properly structured, dividend-paying whole life policy with a mutual company. Instead of financing major purchases through banks, the policyholder takes policy loans from their own growing cash value, using these funds to buy homes, cars, or fund education and business opportunities. Each time the policy loan is repaid, all the payments, including interest, go back into the policy, increasing both the cash value and the death benefit. Over a lifetime, the household can accumulate well over $1 million in liquid, accessible cash value, while also owning all their major assets outright, since the cash value is used as collateral, not depleted, for these purchases.

At retirement, the Whole Life Banker enjoys about the same net worth, $1.5 to $1.8 million, but with a key difference: $1 million or more of that is fully liquid in policy cash value, not locked away in illiquid home equity or accounts with withdrawal penalties. The home and other assets are owned free and clear, financed through policy loans rather than bank loans, and the entire system is under the policyholder’s control, no bank approvals, no foreclosure risk, and flexible repayment terms. Upon death, the heirs receive a guaranteed, tax-free death benefit of $3 - $5 million, even if policy loans are outstanding (the balance is simply deducted from the payout). The legacy is secure and far larger than with the traditional BTID path.

In summary, the traditional path leaves most families with illiquid assets, modest liquid savings, and little or no guaranteed inheritance, while the majority of their interest payments and wealth flow away to banks and lenders. Whole Life Banking™, by redirecting savings and interest into your own system, allows you to fully own your assets, maintain maximum liquidity, and guarantee a multi-million dollar, tax-free legacy for your heirs, all with far greater control, flexibility, and peace of mind throughout life.