Why is Term Insurance Better Than Whole Life Insurance?

Any unfortunate event can financially impact your loved ones. During times of uncertainty, life insurance will ensure that your family is financially safe. Choosing between term life insurance and whole life insurance to invest in can be a daunting task. 

Term insurance and whole life insurance are popular life insurance products that provide financial coverage to the life assured’s family in the event of his or her demise. Term insurance provides coverage only for a specific time period, while whole life insurance protects the policyholder for life. When purchasing life insurance, it becomes an important decision to choose the best between both of them. So, read on to find out the difference between term and whole life insurance and which is better. 

Meaning and Benefits of Term Insurance 

Term insurance is a life insurance plan that provides coverage for a specific tenure. In this type of policy, an insurance company provides a death benefit to the policyholder’s family if he or she dies during the policy period. The premium for the term insurance plan keeps increasing. So, it is best to buy a term insurance plan at an early age. 

Here are some benefits of a term insurance plan: 

• Affordable Premiums: One of the great advantages of investing in term insurance is that it comes with a low premium. Therefore, you can plan the future for your loved ones without hampering your day-to-day expenses. 
• Family Protection: The insurance company pays assured death benefits to the nominees of the policyholder upon their demise. Therefore, a term insurance plan will protect your family in case of any mishap or unfortunate event.  
• Easy Purchase: Anyone can easily buy a term insurance plan at a young age. All you need to submit is your income proof and other relevant documents to secure the future of your loved ones.
• Enhanced Benefits: The policyholders can enhance the coverage of their term insurance plan by purchasing add-on riders like critical illness benefit riders, premium waiver benefit riders, and others. 

Meaning and Benefits of Whole Life Insurance 

Whole life insurance is a life insurance product that provides lifetime financial coverage to policyholders. This type of plan provides both maturity benefits upon the completion of the policy tenure and death benefits upon the unfortunate demise of the policyholder. The maturity age for whole life insurance is 100 years. 

Here are some benefits of a whole life insurance plan: 

• Lifetime Coverage: Whole life insurance provides lifetime coverage to policyholders. If you survive until you turn 100 years old, an insurance company will pay you a maturity benefit. However, in case of your demise during the policy tenure, a death benefit will be paid to your family. 
• Loan Facility: During financial emergencies, whole life insurance policyholders can avail of a loan against their policy. However, it is only possible if there is no outstanding premium on your life insurance plan. 
• Lower Premiums: The whole life insurance premium remains constant throughout the entire policy tenure. So, if you purchase a whole-life plan at a young age, you will continue to enjoy the coverage for a lifetime at the same premium. 
• Dual Benefits: This type of life insurance provides the dual benefits of savings and protection. The insurance company pays a maturity benefit if the policyholder survives the policy period, and a death benefit is paid in the event of the policyholder's death. 

Term Insurance vs. Whole Life Insurance 

A detailed comparison between term insurance and whole life insurance is highlighted below. 

Final Words

In conclusion, term life insurance is better than whole life insurance for those who are purchasing a plan in their 40s. However, if you want to purchase life insurance at a young age, it is ideal to purchase whole life insurance. It provides both life coverage and acts as a savings bank for the policyholders. For more personalized advice, you can contact customer service at InsuranceDekho. 

Also Read: 

What Is a Joint Loan Account?