Should I Get a Term Life or Whole Life Insurance?
Table of Contents
Choosing an appropriate life insurance is a difficult choice that should not be made without careful consideration of several factors. There are different types of life insurances of which, the following are the two most popular ones: term life insurance and whole life insurance. To know which plan is the perfect one for you, it is essential to know what all these plans entail.
What is a Term Insurance Plan?
Term life insurance provides you with cover for a certain period of time. It has a fixed policy term. If the policyholder dies within that period, the beneficiaries receive the pay-out. However, if they die after the policy term period, there is no pay-out. In other words, the coverage is only valid for a certain period.
Pros
- Cheaper premium rates
- Choice of the policy term
- Simpler terms and conditions
- Simpler to obtain
Cons
- Expires after a certain period
- No pay-out in case death before the policy term expires
Buy a term life insurance if:
- You want to avail of cheaper premium rates.
- You want to invest for a short while at a lower rate before moving on to permanent plans.
- You want temporary coverage for a short while undertaking something financially straining or risky.
What is a Whole Life Insurance Plan?
Whole life insurance provides you cover for your entire lifetime. It has guaranteed pay-out on the death of the policyholder. No matter the age they die, their beneficiaries will receive the appropriate sum. Plus, there are no taxes to be paid for the accumulated cash
Pros
- Offers cover for the entire life
- Cash value is stored
Cons
- Can be complicated in terms of choices and conditions
- Has higher premium rates
Buy a whole life insurance if:
- You want lifelong coverage.
- Want to leave behind a large and assured amount of money for your beneficiaries.
- Do not have any immediate risks to health or otherwise, that can cause death shortly.
Endnotes
The choice of life insurance is a very subjective one. You must take into consideration all personal factors and circumstances to make the best plan for yourself. As seen above, both have their pros and cons. Therefore, one must choose carefully.
Read more
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How Do I File a Life Insurance Claim?
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
