"Buy Term" refers to term insurance, which is an insurance contract payable on death. The cost of term insurance is very low, as the chance of making a claim is usually less than 1%. To insure a sum of $100,000, you need to pay $500 or less, depending on your age.
Some people pay more than $5,000 on a life insurance plan to insure $100,000. This is a traditional plan that provides insurance cover and savings. When the policy is terminated at a future date, there is a cash value that is refunded. It represents a portion of the premium, accumulated with interest.
Under the "Invest the Difference" concept, the balance of the savings is invested separately. Usually, it will give a much higher return.
Insurance agents like to sell the traditional plan because they can earn a high rate of commission (up to 100%) of the annual premium, including the saving portion.
If you "buy term" separately, you only pay commission to the agent on the term insurance premium. You save commision on the saving portion.
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