Whole Life Plan Vs.Term Life: Key Differences, Pros & Cons Explained
Life Insurance is a legally binding contract between the two parties, namely the insurance provider & the policyholder, wherein the insurer guarantees to pay the beneficiaries in case the insured dies against the premium amount paid by the policyholder during his/ her lifetime. The choice of the right insurance policy might differ from one individual to another, as what may suit you is not a possibility for someone else; it is not. In this article, let us understand the difference between the two types of life insurance plans, namely, whole life & term plans. What is Whole Life Insurance? Whole life insurance is a kind of Life Insurance that covers the entire life of the policyholder, i.e. about 99 to 100 years of age, guaranteeing the death benefits to beneficiaries upon their sudden demise. The partial premium paid by the policyholder is allocated towards the sum assured, & the remaining portion is invested. The amount of profit is paid to the policyholder if either they survive till the completion of the maturity period or they decide to withdraw the funds, depending on the fund’s performance. Additionally, some of the policies pay dividends to the policyholder, helping them achieve their financial obligations post-retirement. What is Term Life Insurance? Term Life Insurance is a type of life insurance where a specific amount is mentioned to the nominee to be received on the policyholder’s demise. It is a cost-effective life insurance plan that is considered quite useful due to the financial compensation being offered to the dependent family members. A Term Insurance policy is vital as it offers comprehensive life protection coverage to the family members of the policyholder in case of a sudden demise. Difference Between Whole Life & Term Life Insurance Plan The following are the differences between a whole life plan &a term life insurance plan: Basis of Difference Whole Life Insurance Plan Term Life Insurance Plan Premium Higher in comparison to term plans Lower than whole life plans Period covered Lifetime coverage Ranges between 10 & 30 years Permanent Coverage Permanent Not permanent Premium Remains constant Sometimes increases Dividends Depends on the insurance service provider No Dividends Cash Value Present & gets accumulated over a period Not involved Favourability Long-term plan Short-term plan Bonuses Received Not received Use in Estate Planning Used Not Used Health Exam Mandatory Depends on the amount of insurance Benefits of Whole Life Insurance Benefits of a Term Plan Drawbacks of Whole Life Insurance Drawbacks of a Term Plan How to Purchase a Whole Life or a Term Plan Online? Provided are the steps to purchase a whole life or a term plan online: Step 1: Visit the online webpage of the insurance provider company. Step 2:Provide some basic details, such as gender, name, occupation, date of birth, mobile number, etc. Step 3:Provide some additional details, such as education,occupation, annual income, &smoking habits. Step 4:Choose the appropriate age between 99 & 100 years if you want to opt for a wholelife plan. Step 5:Go through the list of plans available & choose one that suits you the most. Step 6: To buy a plan, make a payment towards the plan chosen by the preferred mode. How to Choose an Appropriate Insurance Plan? In case you are not sure which plan to choose according to the financial protection & budget, you should definitely try a term insurance calculator. Let us look into the steps: Whole Life Vs Term Plan – Which is Better?









