Insurance is somehow not a very interesting topic and hence, most of the people try to skip the same. But again, they feel that insurance is needed and hence they look for life insurance policies but they are somehow reluctant to discuss on topics like Term Vs Whole Life Insurance. Amazingly enough, majority of the people are not aware of these two forms of insurance. However, they are the two broad spectrums which are available with subheads under them. It is therefore very important to understand them.
In both whole life and term policies, the beneficiaries of the policyholder will get a lump sum amount of money in the event of unfortunate death of the policyholder. These policies are meant to provide the necessary cushion to the family members in the event of the death of the policyholder. Term and Whole life insurances are different from each other and the differences are mentioned below in the remaining part of the article.
Term Insurance versus Whole Life Insurance
Whole Life Insurance: This is the form of insurance in which the beneficiaries of the policy holder will get a lump sum amount of money in the event of the unfortunate death of the policy holder. This money will act as the cushion against all financial odds which the beneficiaries can face after the demise of the policyholder. This is one aspect of the whole life insurance. The other aspect is that in case the policy holder survives the term of the insurance, the policy holder will be entitled to get a lump sum amount of money either on retirement or on the maturity of the plan. Thus, the whole life insurance plan can be considered as a type of a savings plan or a pension plan. Remember that this description gives the broad spectrum of the whole life insurance and there are many subheads present which are tailored for the specific needs of people. So, you will have to be careful about choosing the plan that suits you the best.
Term Life Insurance: This type of policy existed ever since the concept of life insurance evolved. In this type of policy, the beneficiaries will get the cash benefits only if the policyholder dies within the term of the insurance. In case the policy holder survives the policy life, there will be no cash benefits given to the policy holder or the beneficiaries. Since the insurance company is not supposed to give any kind of survival benefits, the price of term insurance is generally low. So, just in case you are looking for maturity benefits, this is not the right type of insurance for you.
People ask which one is better. Well, this is a very difficult thing to decide. Different people have different requirements and priorities. If budget is a constraint, people go for term insurance. Again if people think that there is ample savings which can help them to live comfortably after retirement, they just opt for term insurance. However, if maturity benefit is something you are eyeing for, whole life is the choice to be made! So, it all depends on you.
