What is the Difference between Term and Whole Life Insurance Plans?
Difference Between Term and Whole life insurance – Term insurance and whole life insurance are two different concepts. Both are different products, which are designed keeping in mind the different needs of the consumers. The consumer can choose any of the above two products based on the financial requirement keeping his future goal in mind. (हिन्दी में पढ़ने के लिए यहा क्लिक करे।)
If you plan to take an insurance plan, you will probably be informed about term insurance plans and whole life insurance plans by an insurance agent.
The essential benefits provided in both the plans mentioned above differ if the policyholder dies during the policy tenure.
Do you know about the difference between Term and Whole Life Insurance? It doesn’t matter, if you don’t know about the difference between term and whole life insurance. This post will provide detailed information about the demand draft number, so read this post until the end.
What is term insurance?
Before understanding the Difference between Term and Whole Life Insurance, it is more important to know what term insurance is. Term insurance is a type of life insurance under which a fixed amount is deposited every month by the policyholder for a certain period. If the policyholder dies during the policy term, the death benefits are provided to the policy holder’s nominee.
If the policy term ends, i.e., on the policy’s maturity, no benefits are given to the policyholder. In a nutshell, it is a type of life insurance that pays the policy’s benefits to the holder’s nominee only after the death of the policyholder. If the policyholder survives until the end of the policy term, then no advantage is given.
Hence term insurance policies are sometimes also called pure life insurance policies because, during a specific period, the policyholder can obtain a higher amount on death by depositing a minimum amount.
The customer can avail individual flexibility while opting for the sum assured or tenure for term insurance.
However, the benefits of a term insurance plan are quite limited in other life insurance policies because maturity or survival benefits are not provided in the term insurance policy.
If you choose an insurance policy for savings and investment, this may not be a good option for you. In this, death benefits are given only after the death of the policyholder.
What is a Whole Life Insurance Policy?
Before understanding the Difference between Term and Whole Life Insurance, it is more important to know what is whole life insurance. Whole life plans are a type of whole life insurance that gives the insured flexibility to choose the sum assured, tenure. The policyholder can choose the sum assured and tenure, considering his future requirements and financial needs.
This insurance provides survival or maturity benefits to the policyholder as per the chosen insurance plan. Under this type of policy, the premium is deposited by the policyholder for a specified period. After the policy’s maturity, the benefits are provided to the policyholder as per the predetermined plan. The policyholder can avail loan against the whole life insurance policy from the insurance company at the lowest rate. On this policy, the policyholder can get a lump sum as survival benefit, surrogate payout on premium, and maturity benefit in the form of a survival benefit.
In short, whole life insurance policies essentially provide cover to the lifetime policyholder.
Difference between Term and Whole Life Insurance
Difference between Term and Whole Life Insurance can be well understood on the basis of the points given below.
- Term insurance policies pay a much lower premium as compared to whole life insurance policies.
- In whole life insurance policies, premiums are paid uniformly throughout the policy term. In contrast, in term insurance policies, dynamic premiums have to be paid when renewing the policy.
- Premiums are not refundable in term insurance policies. Premium benefits are provided only after the policyholder’s death based on the terms and conditions mentioned in the policy.
- Whereas in whole life plans, the policyholder’s benefits are provided when buying the policy even after the policy term is over.
- In a term insurance policy, insurance is provided to the insured for a specified period as far as the policy’s benefits are applicable. At the same time, a whole life insurance policy offers a flexible period to the consumer. Generally, in whole life insurance policies, the right to choose the policy is given until 100 years.
- In a whole life insurance policy, the premium paid by the policyholder is invested by the company in various protection funds. The company gives an additional bonus to the policyholder if there is profit in the amount invested. Whereas in term insurance, no such dividend is declared.
- The company can obtain a loan at the lowest rate on the premium amount deposited under the whole life insurance policy, whereas this cannot be done in term life insurance. The loan amount taken by the policyholder is deducted from the Sum Assured Amount minus the interest on the loan amount. It does not affect the premium to be deposited in the future. At the same time, no such facility is provided by term insurance.
- A whole life insurance policy works like a savings or protection plan, whereas term life insurance does not provide any benefits other than death.
Which is better in a Whole Life Insurance Policy & A Term Insurance Policy?
After understanding the difference between Term and Whole Life Insurance thoroughly, you can choose yourself which policy will be more beneficial for you. If you want to know my opinion, then I think Ideally, if you are unmarried and your age is between 30 years to 30 years, a term insurance plan can be a good option because this plan can get you maximum protection benefits at a minimum premium.
If you have any physical illness, then term insurance can provide you maximum benefit in minimum tenure.
But if you are a married person and have children, you should invest in both term insurance and whole life insurance policies. So that if you are no more than term insurance can provide better financial protection to your family in your absence. If you are alive, the whole life insurance policy will provide you with cash value that you can use at different lifetimes.
If you are above 40 years of age, the whole life insurance policy is more suitable. Because a whole life insurance policy will provide you cover for your whole life. This policy will be cheaper in premium than a term insurance policy at this stage of fellow age. If you want to leave a considerable amount as an inheritance for your family in the last moments of your life, then you can opt for term insurance even at this age.
I believe that after understanding the difference between Term and Whole Life Insurance, you can choose the best insurance for yourself.
Read Also : – How to Close Axis Bank Account Online?