Term or Whole Life Insurance – Which One Should You Get and Why
Are you unsure about which insurance policy to invest in? Or are you confused between a plethora of options for insurance? If yes, then hang in there for a bit more because we’ve got you covered on this. With a number of options available in the market, there is an increasing competition amongst the insurance companies in order to sell their products.
However, there are two most widely used insurance policies which are constantly pitted against each other due to their popularity. These two variants of life insurance policies are Term Insurance and Whole Life Insurance which cater to the needs of the customer. Both of these policies are different in their own ways. Therefore, keep reading to find out the difference between the two:
What is Term Insurance?
If you’re looking forward to investing in cheaper policies, then term Insurance should be your go-to. Being the simplest type of insurance, term insurance offers you with a death benefit to the policyholder. Apart from that, it is also a good option for savings and investment.
Under a term insurance policy, there are numerous features that add up to the term insurance benefits. It provides options for increasing and decreasing death benefits, life stage options as well as provision of covers for either critical illness or terminal illness. Besides, it also provides other features that are mentioned below:
- Provision of death benefits
- Provision of term insurance benefits post the death of the policyholder
- Affordable plan of insurance
- Renewal of the plan for more coverage
- Conversion to the whole life insurance plan
What is Whole Life Insurance?
As the name suggests, Whole life insurance offers you a complete life coverage. Therefore, it also called a permanent life insurance policy. When you invest in a whole life insurance policy, you get to choose the frequency of your premiums as well as its withdrawals.
Under whole life insurance, the policyholder can accumulate his bonuses, loyalty additions or guaranteed additions until the tenure of the policy. This type of insurance also offers other features for the betterment of the policyholder. Hence, take a look at these features mentioned below:
- Provision of life coverage
- Provision of death benefits as well as cash value
- Creation of cash value takes 12-15 years
- Expensive premiums
- Can also be used for estate planning
Which one should you get from the two?
If you are an unmarried person who is in his late 20s or 30s, opt for a term insurance policy. This is because of the protection for premium payments offered by term plans. It is also ideal for people going through health issues as it will allow gaining higher term insurance benefits in a shorter duration.
For people above 50 years of age, whole life insurance is an ideal choice. This is because it offers a life coverage through the entire period of your plan. When you invest in it, you’ll be providing for your family even at times of your death.
For people with kids, it is advisable to invest in a combination of both: term insurance and whole life insurance. This is possible if you purchase a term rider along with a whole life insurance policy.
Now that you know which one to opt for, assess your needs and look into the pros and cons of both the policies. Once you have done that, make a decision with the help of an expert.