Term insurance plans, as well as, whole life insurance plans, are two entirely different concepts that fulfil the distinctive needs of the customers. If you are confused between both the products, in this blog, we will help you make a clear decision.
What is Term Plan?
Term insurance is a form of life insurance in which premium is paid by the buyers for a particular time period. And if the insured person passes away during the policy period, the nominee or beneficiary will receive the death benefits. And if the insured person survives for the entire insurance period, no benefit is paid to the beneficiaries. This type of life insurance policy is also referred to as pure life insurance policies where you acquire high amount assured by the insured person paying a particular nominal premium for a specific period of time.
What Is Whole Life Insurance?
Whole life insurance plan is comprehensive life insurance coverage that offers high flexibility in selecting assured some, tenure, etc. Additionally, this type of policy also offers maturity benefits or survivor benefits based on the terms of the policy. Within this policy, the premium is likely to be collected for a particular time period or throughout the life of the person insured.
Differentiating Factors between Term Life Insurance Plans and Whole Life Insurance
Following are some of the prominent factors that differentiate the two concepts from each other –
- Flexibility
Surrendering a term plan is easier as opposed to an insurance policy. In the case of term insurance plan, if the person does not pay the premium in time, the policy benefit is terminated. In whole life insurance, on the other hand, the maturity benefits are only provided if the insured person has completed the policy for its exact tenure period. So, if the insured surrender of closes his or her policy, no benefit will be recovered and only a part of the premium amount will be paid after many deductions.
- Death Benefits
A common difference between both these insurance plans is that a term insurance plan offers you death benefits only if you expire during the life of the policy. However, in whole life insurance, an insured person receive maturity as well as death benefits. Additionally, the amount of death benefits is comparatively higher than the amount of maturity benefits.
- Amount of Premium
When it comes to insurance policies, higher coverage is complemented by higher premium rates. This is why the majority of people do not get the actual coverage that they need. These policies also come with low return, reducing the surrender cases among the policyholder. Term insurance plans, on the other hand, are relatively more affordable and offer greater coverage at reduced costs. This is why it is one of the most popular insurance plans out there in the market.
There you have it, everything that you need to know about term plan and whole life insurance plan. By comparing the above factors along with a bit of research on your part, you will be efficiently able to choose an insurance policy to safeguard your money and protect the future of your family financially.
