Date of Award


Document Type

Open Access

Degree Name

Bachelor of Arts



First Advisor

Tomas Dvorak




life insurance, investment, coverage, solution


Financial experts have been conflicted for decades in regards to the most effective strategy for purchasing life insurance. Specifically, is buying an expensive whole life insurance policy the most appropriate solution, or is purchasing cheap term insurance and investing the rest of the money in a side fund more effective? These strategies were compared side by side across a variety of scenarios with varying account allocations, time horizons and tax treatments. Based on our results, buying term and investing the difference is the most appropriate solution across the majority of the scenarios that were tested. This was due mainly to the higher rates of return that are experienced in the market compared to the modest growth of whole life policies. Ultimately, however, it was still difficult to claim that buying term and investing the difference was the superior solution overall, as some experts claim. The whole life strategy has many advantages, especially when it comes to leaving bequests which, as past research has indicated, are a driving force behind demand for life insurance. Whole life insurance is a safe, tax efficient place to save money that complements many of the side funds utilized in the “buy term, invest the difference” strategy. Many of these accounts have contribution limits, so individuals who max them out would benefit greatly from allocating some additional savings toward a whole life insurance policy.