Should I buy term and invest the difference instead?
For a household whose need ends, term coverage plus a separate low cost portfolio is usually the cheaper and simpler arrangement, and saying otherwise would be false. The two do different jobs: one funds a temporary need at low cost, the other funds a permanent need and accumulates a contractual value.
What kind of answer this is
- Claim type: Professional judgment
- Jurisdiction: Canada wide
The contractual differences between the two products are facts. Which arrangement suits a particular household is professional judgment applied to that household.
How it works
The comparison holds only where the difference is in fact set aside every year for decades, which is where it commonly fails in practice, and only where coverage is no longer needed once the term expires, which is where it fails on the contract.
The cost or the catch
Term ends, and renewal at an older age is priced at that age, so a need that outlives the term is met at a cost nobody modelled. Judging the two on growth alone answers a question neither of them was built for.
Where this answer may not apply
- Some term contracts carry a conversion privilege to permanent coverage without new medical evidence, which changes the decision, and that privilege has its own deadline set in the contract.
- A household with a permanent need is not choosing between the two, because the temporary product does not meet the need.
- Group coverage held through an employer usually ends with the employment, which is a third case again.
What to verify in your own contract
- Whether the term contract offers a conversion privilege, and at what age or year it expires.
- What the coverage would cost if it were still needed after the term ends.
- Whether a difference has in fact been set aside consistently in the past.
- Whether both sides of the comparison are stated after their own costs.
Continue to the full explanation
Read the complete costs and risks analysis.
Accountability and disclosure
- Written by
- José Salloum
- Professional capacity
- Financial security advisor, Canadian Wealth Creation Centre Inc., operating as IBC Financial
- Reviewed by
- Insurance and contract education tier, reviewed under a licensed insurance professional's own authority
- Jurisdiction
- Canada wide
- Last reviewed
- 2026-08-30
- Version
- 1.0
- Compensation disclosure
- Canadian Wealth Creation Centre Inc., operating as IBC Financial, may receive insurer paid compensation if a policy is purchased. It takes the form of first year compensation followed by renewal compensation, and the amount varies by insurer, product, age, premium, contract design, riders and the arrangement with the managing general agency. No single figure would describe every contract honestly, and none is published here.
- Report a correction
- Info@ibcfinancial.com. Write without a policy number, medical information or account details.
Last reviewed 2026-08-30. By Jose Salloum, Financial Security Advisor.