Whole Life vs. Term Insurance: Definition, Differences, Benefits & More
Life insurance is synonymous with financial protection. Life insurance plans compensate against the financial loss suffered in case of premature death. Moreover, the plans are designed in such a manner that they help in fulfilling your life goals effectively. For example, there’s a child or kid insurance plan which helps you create a secured financial corpus for your child. Similarly, there are pension plans which create an earmarked retirement pension and promise lifelong incomes. Thus, life insurance plans find a place in every aspect of your life and provide you financial security.
Life insurance comes in many variants that constitute the various types of life insurance plans. Among these variants, term insurance is usually compared with other sorts of life insurance plans. But is the comparison justified? Is term insurance similar to the other sorts of life insurance plans?
No, it isn’t. Term plans differ from other sorts of life insurance plans in various aspects. Let’s understand the difference between term insurance and life insurance in details –
What is the term plan?
A term insurance plan is a kind of life assurance plan which covers the risk of premature death. In case of the death of the insured during the term of the policy, the policy promises to pay a death benefit. Term insurance plans promise high coverage at low premiums allowing you to avail a high sum assured which might be able to meet your family’s financial requirements in your absence.
Term insurance is a type of life assurance plan among others. Besides term insurance, life insurance plans come in other variants too.
Term insurance v/s life insurance
Now that you have understood the basic meaning of both, let’s understand the difference between term insurance and life insurance plans. The differences between the two can be outlined in the following parameters:
Coverage term insurance plans promise coverage only against premature death. Under most term plans, the benefit is paid only if the insured dies during the tenure of the plan.
Other sorts of life insurance plans, however, also have a maturity benefit. While these plans cover the risk of premature death, they also pay a benefit if the insured survives until the end of the policy tenure. Thus, in terms of coverage, term plans and other insurance plans are quite different.
Bonus and other additions
There are not any bonuses or other sorts of additions under term plans. Just in case of death, the basic sum assured is paid. Under other kinds of life insurance plans, like an endowment, money back, or child plans, you can get bonus additions, loyalty additions, guaranteed additions, etc. These additions enhance the policy benefits.
Flexibility term plans are quite rigid in the sense that they do not have any paid-up or surrender value and do not pay any maturity benefits. Life insurance plans, on the other hand, are flexible. Traditional life insurance plans promise a paid-up value and a surrender value. You’ll also avail of policy loans under such plans. Moreover, if you choose ULIPs, you’ll also withdraw partially, switch, or pay additional premiums.
Buying life insurance for senior citizens is always a wise decision to secure your life and medical support. In fact, you can also think of buying easy issue life insurance which’s a life insurance policy you can be approved for with minimal health questions. Depending upon your situation, buy the one that is most suitable.