Whole life insurance vs term insurance
Updated On Jan 16, 2023
Table of Contents
A life insurance policy is a tool that can safeguard you against any mishaps that may happen in the future. There are two types of life insurance policies; term life insurance and whole life insurance. In term life insurance plans, the policyholders are eligible for coverage for up to a specific duration. Whereas, in a whole life insurance policy, an insurance company provides lifetime coverage to the policyholders. You can buy both of these life insurance products online. However, before purchasing, you must understand the difference between them. Continue reading to find out!
What is Whole Life Insurance?
A whole life insurance policy is a permanent insurance protection plan that lasts as long as the policy is in force. It is worth the money as it provides an investment benefit in addition to an insurance benefit. You have access to the money if you need it once enough has been saved from the premiums you've paid for your insurance. But the cash you took out of your insurance policy is seen as a debt that you must pay back to the insurance company. The cash value and death benefit of the policy are reduced if this sum is not repaid.
What is Term Life Insurance?
A term insurance policy is most suitable for those who want to accomplish their short-term financial goals. Generally, these policies are available at higher coverage. Under this type, the beneficiaries of the policyholder receive the death benefit on his/her demise. The death benefit is either paid in a lump sum or in installments to the policyholder. However, term insurance policies do not provide any cash benefit if you are alive when the policy's tenure is completed.
Whole life insurance vs term insurance
The difference between a whole life insurance policy and a term life insurance policy is outlined below.
|
Basis |
Whole Life Insurance |
Term Life Insurance |
|
Premiums |
The premium amount remains constant during the entire policy period. |
Term insurance plan premiums are lower than whole life insurance plan premiums. |
|
Tenure |
Flexible policy tenures are provided until the policyholder reaches 100 years. The policyholder will get maturity and survival benefits at the age of 100. |
The policyholder gets coverage only for a certain period of time. |
|
Cash Value |
In this case, whole life insurance premiums were paid twice as an investment. An insurance company can provide you with a bonus. |
The loan amount is deducted from the policy’s sum assured, which is the accrued interest of the insurance company. |
Conclusion
There are numerous top life insurance companies in India that provide various whole and term life insurance plans. Therefore, before purchasing any of the plans, make sure that you read all the benefits, premiums, sum assured, and other terms and conditions carefully.
Also Read:
Reasons to invest in life insurance
Max Life Smart Plus Plan: Why Should You Buy This Term Insurance?
