Life insurance is a way to safeguard your future. From helping pay off debts to ensuring that you have a comfortable life in the future or when you are old, there are plenty of reasons to buy a life insurance policy from a credible insurance company.<\/p>\n
There are two types of life insurance that you can buy \u2013 whole life insurance and term life insurance. While the whole life insurance policy covers you for your life, the term life insurance covers you for a fixed-term period. Undoubtedly, the former has a higher and long-term premium, while the latter is much cheaper, and the premium needs to be paid for a specific period.<\/p>\n
One of the characteristics that remains the same for both types of life insurance policies is that both come with similar death benefits \u2013 the money essentially covers all debt repayments, tax payments, mortgage payments, funeral costs, and other such expenses.<\/p>\n
But, what are the differences between the two types? Let us explore the same.<\/p>\n
S. No.<\/strong><\/td>\n| Criteria <\/strong><\/td>\n | Term Life Insurance<\/strong><\/td>\n | Whole Life Insurance<\/strong><\/td>\n<\/tr>\n | 1.<\/td>\n | Term period<\/strong><\/td>\n | This is for a shorter period \u2013 a fixed preset term period. The term periods usually available are 5, 10, 15, 20, and 30 years.<\/td>\n | The policy covers the insured for life. However, before such an insurance policy is bought, there is a qualifying health examination. In case you wish to buy a Whole Life Insurance Policy without a medical examination, the price of the policy is hiked up.<\/td>\n<\/tr>\n | 2.<\/strong>\u00a0<\/strong><\/td>\n | Purpose\/Value<\/strong><\/td>\n | The objective of buying this type of life insurance is to protect the dependents or the close family members when the insured person dies prematurely, within the term period.\u00a0 Thus, the value is death benefits only if the person dies within the period.<\/td>\n | The value is the death benefit along with the cash value. How? Over a period, say 10 years, the cash starts to accumulate decently. And beyond that, the cash accumulation builds up pretty well to offer financial support to your dependents.<\/td>\n<\/tr>\n | 3.<\/strong>\u00a0<\/strong><\/td>\n | Cost-wise<\/strong><\/td>\n | Term life insurance policies are affordable and quite easy. However, if you wish to take the life insurance policy at an older age, say after 50 years, the premium will be higher.<\/td>\n | The premium is expensive, much higher compared to term life insurance policies.<\/td>\n<\/tr>\n | 4.<\/strong>\u00a0<\/strong><\/td>\n | Added benefits<\/strong><\/td>\n | \u00b7 The life insurance policy can be converted to a whole life insurance policy.<\/p>\n | \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The term period can be renewed if you wish to extend the coverage.<\/td>\n \u00b7 Partial cash can be taken on loan or withdrawn during the policy term.<\/p>\n | \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The cash accumulation can be considerable if the whole life insurance policy is in force for a good period.<\/td>\n<\/tr>\n 5.<\/strong>\u00a0<\/strong><\/td>\n | Benefits<\/strong><\/td>\n | Finite term. Simpler policies. Cheap. The policy can be stopped in between.<\/td>\n | It is possible to take a loan or withdraw a partial amount. Death benefits are tax-free. Offers protection for life. The best way to build wealth.<\/td>\n<\/tr>\n | 6.<\/strong>\u00a0<\/strong><\/td>\n | Disadvantages<\/strong><\/td>\n | \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Limited protection is a big disadvantage.<\/p>\n | \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This policy cannot be used for building wealth.<\/p>\n \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In fact, most people tend to spend all the money saved in their lifetime because the term ‘insurance’ has a fixed life term.<\/p>\n \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If you choose to cover a higher value of death benefit or go in for a longer coverage length, the premium will be expensive.<\/td>\n \u00b7\u00a0 The policy is a lot more complex than term life insurance.<\/p>\n | \u00b7\u00a0 Costly and can prove to be out of reach for many.<\/p>\n \u00b7\u00a0 You need to run it for a few years for wealth to build up.<\/p>\n \u00b7\u00a0 Any loan taken will impact your death benefits.<\/p>\n \u00b7\u00a0 If the premium is not paid for the first few years or you default, then the policy can get surrendered.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n |