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Term Insurance Vs Whole Life Insurance - Which One Should You Get And Why

Term insurance vs whole life insurance

Term Insurance Vs Whole Life Insurance - Which One Should You Get And Why


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October 25, 2019

By : Bajaj Allianz Life

Life insurance plans provides for the protection of your entire family as well as allows them to accomplish their life goals even in your absence. While purchasing a policy, investors prefer either term plans or whole-life insurance policies. Since these two policies are always pitted against each other, the selection between them is a daunting task.

Before purchasing either of the two policies, it is essential to understand the basics. Both plans are different from one another. Hence study them thoroughly, and make the final decision of purchase based on your needs. In this article, you’ll find out the difference between term life insurance and whole life insurance so that you can take a call on which plan is apt for you. Take a look:

What is term life insurance?

A term insurance policy offers the beneficiaries with financial security. It is convenient as well as an affordable solution to safeguard your loved ones from financial exigencies in your absence. The insurance company provides the nominees with death benefits on the demise of the policyholder. The death benefit payout can be received as a lump sum payment or on installments, depending on the beneficiary’s choice. The financial support provided by the insurance company allows the beneficiaries to realize their life goals in the policyholder’s absence.

What is whole life insurance?

A whole life insurance policy offers protection to the policyholders up to 100 years. Additionally, this policy is an amalgamation of insurance as well as an investment under a single roof. The paid premium accumulates so that you can fulfil your life goals.

Now that you know the basics about each of the two policies, let’s begin by understanding the differences between the two. Take a look at the differentiation between a term insurance policy and a whole life insurance policy mentioned below:

What is the difference between a term insurance policy and whole-life insurance policy?

DIFFERENCE

TERM POLICY

WHOLE LIFE POLICY

Coverage

Covers the policyholder for a shorter duration as compared to the whole life policy

Covers the investor up to 100 years

Benefits

Provides a death benefit

Provides death benefits as well as maturity benefits

The need for a life insurance policy depends on person to person. For every policyholder, the investment in either of the two plans is different. Typically, the critical factor of consideration at the time of purchase is life coverage. In the meantime, take a look below which will help you understand your need for each policy:

Why is it a suitable choice for you?

A whole life insurance policy is suitable for those people who wish to fulfil long term life goals like the daughter’s wedding, etc. A policyholder could make an investment when he is in his early 20s. When you opt for whole-life policies at a young age, you are charged with a small premium. As you grow older, you’re at an enormous risk of falling sick. Hence, the premium rate is gigantic at an older age.

A term policy is useful to fulfil all the financial obligations. If you are the sole income earner and have kids, consider your needs, research and select the right term policy for yourself. Term policies provide the nominees with death benefits on the occurrence of an unfortunate event like the demise of the policyholder.

To sum up, a term plan and a whole-life plan are equally important. However, the decision to purchase lies in the hands of the customer. Therefore, opt for the policy smartly based on your requirement of coverage and the needs of the entire family to fulfil their life goals.

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