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Term Insurance vs Whole Life Insurance
There are various types of life insurance policies available in the market. The two most common types of life insurance policies are term insurance and whole life insurance. People often get confused when choosing between term life insurance and whole life insurance.
To make the right choice it’s necessary to understand the real difference between the both. We have highlighted some pointers to make you better understand the difference.
- Term life insurance has a policy tenure ranging from 10 to 40 years while whole life insurance is for a complete life (100 years).
- Term plans have lower premiums as compared to whole life insurance.
- Term plans do not have maturity benefits involved while whole-life plans have a maturity value component.
This article provides you with complete details about term life insurance and whole life insurance. After reading this article you can make a smart choice between term and whole life insurance.
What is Term Insurance?
Term Insurance is a type of life insurance policy that offers financial coverage to your family in case of your unfortunate demise during the specific tenure. This tenure ranges between 10 to 40 years. The premiums of term insurance are usually lower than the whole life insurance policy.
There are no maturity benefits linked to term insurance policies, only TROP plans return your paid premiums on surviving the policy tenure. Only death benefits are paid to the beneficiary in case of the policyholder’s demise.
Features of Term Insurance
Affordable Premiums
The premiums for term insurance are affordable and low-cost. You can choose the term plan that fits your budget.Flexible premium payments
You can pay your term insurance premiums as per your choice. You can choose from various premium frequencies including monthly, quarterly, half-yearly, or yearly.Rebates or discounts
Term plans offer you rebates and discounts if you are buying a term plan online, are a female, or are a non-smoker.Easy purchase process
It’s easy to buy a term plan. You can purchase it either from PolicyX.com or the official website of the insurer.
We have provided you with a list of best-term plans for your reference.
| Plan Name | Entry Age | Maturity Age | Minimum Sum Assured | Unique Features |
|---|---|---|---|---|
| HDFC Life Click 2 Protect Super | 18 to 84 years | 85 years | Rs 5,000 | Flexibility to choose from multiple coverage options, Option to increase your cover at key life stages, Option to extend the policy term. |
| Max Life Smart Secure Plus Plan | 10 to 67 years | 85 years | Base Death Benefit Rs. 20,00,000 For Secondary Life, in Joint Life: Rs. 10,00,000 | Joint life option, Pay premiums at your convenience, Voluntary sum assured top-up option. |
| Bajaj Allianz Life Saral Jeevan Bima | 18 to 65 years | 70 years | Rs. 5,00,000 | Life covers up to a term of 40 years, Pay premiums at your convenience, Settlement Option with Return Enhancer |
| ICICI Pru iProtect Smart | 18 to 65 years | 85 years | Subject to the minimum premium | Choose from multiple coverage options, Covers critical illnesses, Smart exit benefit |
What is Whole-Life Insurance?
Whole Life Insurance is a type of life insurance policy that offers financial coverage to your family in case of the policyholder’s unfortunate demise during the whole life tenure. You get coverage under whole-life insurance plans for your entire life (100 years). The premiums of whole life insurance are usually higher than the term life insurance policy.
There are no maturity benefits linked to whole insurance policies. Only death benefits are paid to the beneficiary in case of the policyholder’s demise.
Features of Whole Life Insurance
Entire life coverage
The policyholders enjoy life coverage under this plan for a whole life (100 years).Fixed premiums (most of the time)
Generally, the premiums for whole-life insurance policies remain fixed throughout the policy tenure.Maturity benefit component
Whole life insurance policies contain a maturity benefit component. The maturity benefits are offered if the policyholder survives the policy tenure.Loan on policy
Policyholders can avail of a loan facility against the surrender value of their policy. The loan facility depends from plan to plan. You must check the brochure for the same.
We have provided you with a list of the best whole life insurance plans for your reference.
| Plan Name | Entry Age | Maturity Age | Minimum Sum Assured | Unique Features |
|---|---|---|---|---|
| HDFC Life Sampoorn Samridhi Plus | 30 to 60 years | Whole life | Based on minimum premium. | Flexibility to opt for life cover up to the age of 100 years, Bonuses, Guaranteed Additions |
| ICICI Prudential Whole Life Insurance | 0 to 60 years | Whole life | Rs 1,00,000 | Wealth creation through regular bonus additions, Additional life cover for the chosen sum assured, Life cover of double sum assured |
| Tata AIA Sampoorna Raksha Supreme | 18 to 65 years | Whole life | Rs 1,00,000 | Flexibility to choose from below death benefits options: Life, Life Plus, Life Income, Credit Protect Option to increase cover at important milestones with life stage option Lower premium rate for female lives |
| Edelweiss Life Zindagi Protect | 18 to 60 years | Whole life | Rs 25 lakhs | Option to choose between Life Cover option OR Return of Premium option for all-around protection Option to select premium break benefit Flexibility to choose limited pay or regular pay premium payment options |
Difference Between Term Insurance and Whole Life Insurance
| Parameters | Term Insurance | Whole Life Insurance |
|---|---|---|
| Premiums | Lower than whole-life insurance premiums | Higher than term life insurance premiums |
| Coverage duration | The coverage varies from 10 to 40 years | The coverage lasts for a whole life (99 to 100 years) |
| Level of understanding | It is easy to understand that only death benefits are paid in case of the policyholder’s demise during the tenure | Slightly complicated to understand as it involves a cash value component on maturity |
| Maturity benefit | No maturity benefit is involved. Only death benefit is paid | The maturity benefit component is involved. Benefits are also paid if the policyholder outlives the policy tenure |
| Policy expiry | The policy expires after the policy tenure | The policy continues as long as you are paying premiums and the maximum age is 100 years |
| Policy loan | You cannot avail of a loan against your term life insurance | Some whole life insurance policies offer you a loan. It varies from plan to plan and you must check your brochure for the same |
Factors to Consider When Choosing Between Term and Whole Life Insurance
It would be best if you considered several factors before deciding whether you should get term life or whole life insurance. Each type of insurance, whether it is term insurance vs whole life insurance, has advantages and disadvantages of its own.
When choosing between term and whole life insurance, several significant factors must be considered.
Financial obligations
The type of insurance that best suits your needs will depend on your financial obligations, such as paying off a mortgage or financing your child’s education. Consider each policy’s coverage duration and benefits aligned to your unique financial objectives and obligations.
Budget and affordability
Examine your spending carefully and determine what premiums you can comfortably afford. Think about how much you can afford to put towards insurance without putting a strain on your finances.
Personal circumstances and your stage of life
Choosing the appropriate insurance requires careful consideration of your circumstances and your stage of life. Consider your age, health, marital status, number of dependents, and general financial situation.
Risk tolerance and investment preferences
Term life insurance might be a better option if you have a higher risk tolerance and prefer to invest separately. On the other hand, whole life insurance might be a better option if you’re looking for a plan with the potential for cash value growth and want insurance and savings combined.
How to Buy Term Life Insurance and Whole Life Insurance?
You can buy term life insurance and whole life insurance from either PolicyX.com or the website of the insurer.
Buying from PolicyX.com
- Fill out the form at the top of this page with the necessary details.
- Select your income and city. Click on ’Proceed’.
- Update your education and occupation details.
- Select the policy term, premium period, and riders (if required), and then proceed to pay.
- Choose your preferred plan and click on ’Buy this plan’.
*Once premiums are paid you will get the policy details shortly either through email or contact number.
Why Buy from PolicyX.com?
Here are the reasons for buying a life insurance policy for newlyweds online from PolicyX.com:
Compare and choose the best
PolicyX helps you compare a wide range of plans based on their features and choose the one that best fits your requirements.Hassle-free purchase process
Buying life insurance for married couples from PolicyX.com is a hassle-free process as it lets you compare various life plans within 30 seconds.Customer’s choice
PolicyX is a leading insurance aggregator that is trusted and loved by customers due to its best services and support.Good customer service
You can contact PolicyX through email or IVR number and one of their insurance experts will connect with you shortly to address all your concerns.Claim settlement support
PolicyX stands with you even in the hardest of times and provides you with dedicated claim settlement support when required.
Buying from the insurer’s website
You have to visit the official website of the insurer, provide them with the required information, and buy the type of life insurance (term/ whole-life) you want to buy after paying premiums.
Conclusion
Choosing between term insurance and whole life insurance is up to you. Before making a choice you should consider various factors including your financial situation, long-term goals, budget, etc. The major difference between the two types of life insurance is policy tenure and cash value component.
If you are still confused about whether term life insurance or whole life insurance is right for you then you can contact us at PolicyX.com. One of our insurance representatives will contact you shortly and help you choose a plan that best fits your requirements.
Term Life Insurance vs Whole Life Insurance : FAQs
1. What is the primary difference between term insurance and life insurance?
The primary difference between life and term insurance is policy term as term insurance provides coverage for a specific term, from 10, 20, or 30 years, while life insurance provides coverage for the entire life.
2. Is term insurance cheaper than life insurance?
Generally, term insurance is more affordable than life insurance because it offers coverage for a limited time, whereas life insurance provides lifelong coverage and often includes an investment component. The life insurance plan also offers the return that is generated by investing in the market.
3. Can I convert a term insurance policy into a life insurance policy?
Some term insurance policies may offer the option to convert to a permanent life insurance policy without a new medical exam or underwriting, but this varies by insurer and policy terms.
4. What happens if I outlive my term insurance policy?
If you outlive your term insurance policy, it simply expires, and you receive no payout. You may need to purchase a new policy if you still require coverage.
5. Are the premiums for term insurance and life insurance the same?
Premiums for term insurance are generally lower than those for life insurance because term policies have no cash value component and offer coverage for a limited time.
6. Can I customize the coverage amount in both term and life insurance policies?
Yes, both term and life insurance policies often allow you to customize the coverage amount to suit your needs and financial goals.
7. Are medical exams required for both term and life insurance applications?
The company may ask for a medical examination if you are buying any plan with high coverage. Generally, term insurance plans require medical examinations, but this depends on the insurer.
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Written By: Himanshu Kumar
Himanshu is a seasoned content writer specializing in keeping readers engaged with the insurance industry, term and life insurance developments, etc. With an experience of 2 years in insurance and HR tech, Himanshu simplifies the insurance information and it is completely visible in his content pieces. He believes in making the content understandable to any common man.
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