What's The Difference Between Term And Whole Life Insurance?

A person can benefit by paying a certain amount of money to the insurance company and making life insurance that could later be redeemed by their loved ones in case of their demise. Life is uncertain, so thinking about the financial safety of your family is important, especially if you are a sole breadwinner for the family. The best planning in this regard can be done with the help of life insurance plans. In this article, we talk about the two most popular types of life insurance plans - term plans and whole life insurance plans. Let’s begin.

What is Term insurance? 

Term insurance is life insurance where the insured person covers themselves for a specific period. If something happens to the insured person within a specific period and the policy is active, the death benefit will be passed on to the nominee.

Who Should Invest In Term Insurance?

• Only bread earner in the family.
• Someone who has debts to pay back.
• A person with huge responsibilities towards their family.
• A person who does not have sufficient investments or corpus.

Advantages of Having a Term Insurance Plan

Following are some of the key benefits offered by term plans -

•   Simple Structure

Compared to other life insurance, term life insurance is not as complicated. It is not a very lengthy and difficult process either.

•   Financial Safety

The term insurance covers you financially for a certain period, saving your family from going into any financial crisis.

•   Inexpensive Coverage

As term insurance only covers a certain period, it is less costly than other life insurance. The wide coverage offered by term plans make them worth the premium.

What is a Whole Life Insurance Plan? 

Whole life insurance is another type of life insurance. It provides cover for the life of the insured bound by a contract between the insurer and the policyholder in which the insurer guarantees a death benefit to the named beneficiary upon the death of the insured; in addition to providing a death benefit, the whole life policies can do the saving component where cash value may accumulate over time.

Who Should Invest In Whole Life Insurance?

• Adults who have family responsibility.
• People with older parents or young children.
• Lots of loans or any other bad debts.
• Only income maker of the family.

Advantages of Having A Whole Life Insurance

The following are the benefits which become available to you when you get a whole life insurance plan -

•   Permanent Coverage

It has a guarantee of payment and stays throughout the insured's life till their death.

•   Not An expense

Many people think that whole life insurance is an expense but an asset for them.

•   Flexibility

It is very flexible as you can borrow cash value, take short-term loans or even skip premiums, all in cash flow.

•   Never Expires 

Your insurance policy would not expire unless your premiums are unpaid. You can know the nominee will get paid no matter when the demise is.

What Is The Difference Between Term And Whole Life Insurance?

Following are some of the key differences between term plans and whole life insurance plans -

Conclusion

Term insurance and whole life insurance are both life insurance, both providing death benefits but having different features. Depending on their lifestyle, people may find different life helpful insurance. Both have pros and cons, keeping in mind everything one should take up insurance.

Also read: Can I Increase My Life Coverage At A Later Stage?

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