How Does Term Life Insurance Compare to Whole Life Insurance
How Does Term Life Insurance Compare to Whole Life Insurance
6/5/23 4:15 AM
Insurance providers today have a host of options to cater to the diverse needs of insurance seekers. However, amongst the two oldest types of life insurance policies are term insurance and whole life insurance. When you go shopping for insurance, you are essentially presented with two options: term plan or whole life insurance, and your choice is based on your current and future financial needs.
To determine which one is a more suitable option for you, it is important to know the difference between term life insurance and whole life insurance. As insurance secures the financial future of your family, it is important to be aware of the features and the terms associated with your term insurance plan or whole life insurance plan to avoid unpleasant surprises in the future.
What Is Term Life Insurance?
Insurance is often viewed as a web of unpleasant complexities which prevents people from understanding it and reaping from its numerous benefits. Fortunately, however, term insurance is the easiest life insurance to understand. A term insurance plan is a “pure” insurance policy that comes with the promise of a death benefit. It provides the policyholder with a financial cover for a pre-defined term that could range between 5 to 10, 20, or 30 years.
If due to an unpleasant eventuality, the insurance holder was to pass away during this term, a death benefit is provided to the surviving beneficiaries. One of the biggest benefits of a term plan is that it offers high coverage at an extremely affordable premium.
Insurance companies have a wide range of term plan options that enable customisation. Additionally, purchasing an online term plan would help optimise the savings and undertake term plan comparison to find the best term insurance plan based on your lifestyle. It is important to compare term insurance plans to ensure that you find a cost-effective insurance policy that provides comprehensive cover. If you want to analyse the cost of your insurance, you can use the free term plan calculator available online.
Who Should Buy Term Insurance?
Following are the scenarios wherein a term plan is an ideal purchase decision:
- When you are looking for a simple insurance cover
- If you are looking for an affordable insurance plan
- If you have financial dependents
- If you are the sole breadwinner of the family
What Is Whole Life Insurance?
As the name suggests, whole life insurance is a permanent life cover that is active for the duration of the policyholder’s life. It has two distinctive differences from term insurance:
- It does not have an expiry date and continues to provide financial protection as long as you ensure timely premium payment.
- In addition to providing insurance cover, whole life insurance comes with a savings component. This enables you to accumulate your cash value that can act as a source of funds to address future needs.
Whole life insurance promises a guaranteed payout to the dependents of the policyholder. However, for term life insurance, if the policyholder outlives the term, there is no payout offered. Additionally, unlike a term insurance plan, when you withdraw from a whole life insurance plan, the accumulated cash value is returned to you.
Who Should Buy Whole Life Insurance?
A whole life insurance plan is ideal for those who are:
- Looking to build a financial corpus for the future
- Seeking an investment benefit along with an insurance cover
- Wish to have a financial cushion for their retirement
- Wanting to save on taxes along with a life cover
Analyzing the Benefits of Term Life Insurance v/s Whole Life Insurance
Being informed about the features and benefits of each insurance cover lies at the heart of making the right decision. Buying term insurance or whole life insurance is a personal decision based on financial requirements and objectives. However, an analysis of the differences between the features can help arrive at a decision:
Whole Life Insurance
Term Life Insurance
Comes with the dual benefit of building a corpus for future financial needs and an insurance cover
Is a pure life insurance policy that only comes with a death benefit
Provides a maturity benefit alongside a death benefit
Provides only a death benefit
Has a higher premium
Has an extremely affordable premium
The premium amount is fixed for the duration of the policy
Even here, the premium amount remains steady unless you change any add-on coverage or increase the sum assured.
Offers flexibility to withdraw money to address financial concerns
Offers flexibility to enhance coverage with the choice of riders such as critical illness, accidental death, etc.
Zindagi Plus from Edelweiss Tokio Life Insurance
Edelweiss term plan – Zindagi Plus is designed to ensure your happiness. The innovative offerings can help you enhance and strengthen your strategies for wealth creation. Understanding that customers today are pressed for time, Edelweiss Tokio Life Insurance Zindagi Plus Plan has enabled a hassle-free insurance purchase in four easy steps:
- Visit the Edelweiss Tokio website, navigate to the Zindagi Plus page and select your coverage by analysing your financial needs.
- Customise your term plan by opting for a suitable tenure, payout mode, and premium payment frequency.
- Enhance your coverage by choosing from four unique riders.
- Submit the necessary documents for verification.
Once the aforementioned steps are completed, your Edelweiss term plan is provided to you that acts as your companion during times of trial. If you wish to calculate the cost of your insurance, you can use the free term plan calculator available on the Edelweiss Tokio website.
In light of the changing consumer needs, the Edelweiss Tokio term plan comes with unique benefits such as:
- COVID-19 cover to protect your family during the pandemic
- The Better Half Benefit that gives your spouse an additional 50% cover in your absence
- Discounts on premiums with high sum assured
Choosing between term life insurance or whole life insurance depends on your financial needs and understanding whether you need a permanent cover or protection for a definite period. However, it is essential to be aware of the features of each to make an informed decision that you will not regret later. If you are looking for term insurance online, it is important to compare term insurance plans to find a suitable cover at affordable prices.
Neha Panchal - Financial Content Writer
Neha used to be an Engineer by Profession and Writer by passion, which is until she started pursuing full-time writing. She's presently working as a Financial Content Writer, with a keen interest in all things related to the Insurance Sector.