As much as we would like to deny it, money is a driving force when it comes to living a good life. As a responsible earning family member, you would want to ensure that your loved ones never have to compromise their dreams and needs throughout your life span as well as in your absence. And the only way you can ensure that is by investing in a good insurance policy. When you invest in an insurance policy, it acts as a safety net for your family and loved ones in the event of your untimely death.
When it comes to choosing the right insurance policy to invest in, you need to factor in various things like your age, health, budget, and so on. But the most important of them all is to figure out what kind of insurance policy would you want to invest in. There are numerous of them. And if you are new to it all, you may not understand the difference. Two of the most commonly chosen policies are term life insurance and whole life insurance. If you are unaware of the term insurance and life insurance difference, you are in the right place. In this article, we are going to discuss term insurance vs life insurance. To understand the difference between term insurance and life insurance let us first discuss them individually in detail.
What is term life insurance?
Term life insurance is when you pay a fixed premium amount for a pre-decided tenure like 10 years, 20 years, or even 30 years. As far as insurance policies go, term insurance is one of the most affordable of the lot with cheaper premiums. And you can renew your policy once your term is over. However, the premium may then cost you higher. Also, an important thing to note about term insurance is that it pays a fixed amount to your beneficiaries in the event of your death during the tenure. But it does not have any maturity benefits, unlike most other policies.
What is whole life insurance?
Whole life insurance is also known as permanent life insurance and allows you to choose the sum as well as tenure. This policy offers you death benefits as well as saving benefits. As the name suggests, this policy mostly lasts for the entirety of your life without any hike in the premium rates. As a policyholder, you also have the option to borrow money from the insurance company at lower interest rates against your whole life insurance.
Term vs whole life insurance
- Term life insurance requires lower premiums than whole life insurance
- There are no payouts after maturity for term insurance as opposed to whole life insurance
- Term life insurances have a fixed and comparatively smaller tenure. Whole life insurances offer tenure of up to 100 years.
- Whole life insurances offer a better cash value when compared to term life insurance.
- Term life policies offer better customization
Which is a better option?
The one thing you must have understood by reading about life insurance vs term insurance is that they both have their pros and cons. Choosing one is entirely a question of personal choice. Read about the policies thoroughly, compare term insurance and whole life insurance, and understand the benefits they offer before deciding what to invest in.