Insurance is one of the best options of financial planning. In the ever changing life insurance market, there’s tough competition amongst companies & they are offering an extensive range of plans right from protection and savings to investments and wealth creation. When it comes to buying insurance, you can be taken for a ride unless you try to understand the best protection plan on the basis of your life needs.
Term insurance and whole life insurance offer the most comprehensive life insurance coverage. Let us explore the distinct features and benefits of both plans.
Term Life Insurance
Term life insurance, ensures that your family is financially secure and independent, if any mishap happens to you. For this you pay a specific premium amount at fixed intervals during the policy term. If your demise occurs during the policy term, your nominees will receive the ‘Sum Assured’ which you had fixed while purchasing the plan. The coverage is available only for the limited term of premium payment years and there are no Maturity Benefits. The plan has a low premium and substantial coverage amount.
Term Life Insurance Features:
- Policy can be bought for a specific time period like 5, 10, 15, or 30 years, known as a “term”
- Offers high insurance cover at a low premium & is highly cost-effective.
- Most affordable and easiest life insurance to buy
- Ideal if your dependents need protection against debts like a home loan
- Offer various riders like critical illness, accidental death, etc.
- Provides death benefits only
- Pays benefits only if you die while the term of the policy is in effect
- Becomes more expensive as you age, especially after age 50
- You can renew the term if you want extended coverage beyond the term length
- Can be used as temporary additional coverage along with a permanent life insurance policy
- Can be converted into whole life insurance
Whole Life Insurance
A plan which offers both death benefits as well as savings benefits & lasts for your whole life (ie. upto 100 years)! If you decide to discontinue (Surrender) the policy, you get a lump sum. At the time of policy purchase the insurance holder can decide the sum assured amount. You also get the flexibility to choose your premium payment frequency.
Whole Life Insurance – Features
- Provides coverage for a longer tenure – even up to 100 years of age
- Helps in building a fund that provides financial security for future needs of your family
- Both Maturity Benefit as well as a Death Benefit provided
- Flexibility to withdraw money for various financial needs
Based on your age and investable income, you can avail both types of insurance policies. Most importantly, read through the terms & condition of each policy before you apply! Get in touch with a life insurance provider before buying a term or whole life insurance.
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