Differences between Term and Whole Life Insurance
Life is the only thing that is unpredictable, and we cannot rely on it. However, in this era of life, where everything is challenging and demanding have you ever think about your family? What will they do in case of your death?
Well, if you have not thought about it, then it’s time to consider the importance of life insurance. Might be you have heard the words ‘Term and whole life insurance’ if not, then this blog will help you to clear all your confusions.
What is Term Life Insurance?
It is a kind of life insurance that offers you coverage for a limited period. However, once the validity of coverage up, then it’s up to the owner of policy to decide whether he desires to renew it or let the coverage ends here. Moreover, term life insurance is far different from whole life insurance.
Features of Term Life Insurance
- It is low cost as compared to whole life insurance
- No cash value
- The important thing is it is renewable
- Sometimes convertible to full life insurance
What is Permanent Life Insurance?
In contrast to term life insurance, the whole life insurance is a type of insurance that covers the entire life. In simple words, the premiums that last forever. As long as you made the payment agreed by the insurance company, your coverage will be last throughout life. However, the death benefit is no doubt a guaranteed amount.
Features of Whole Life Insurance
- No changes occur on the premium as long as you live
- The most highlighted feature is the death benefit is guaranteed
- Moreover, the cash value account no doubt raises at a guaranteed rate
The difference between term and whole life insurance
The right choice between term and whole life insurance depends upon the circumstances and the financial needs.
However, if we look, then term life policy is perfect for those who don’t want to pay more but wants to get more. In this policy, the insurer can escape from paying the premiums each month.
While on the other hand, whole life insurance gives you guarantee for life that you will get for what you are spending at the end of time. This policy provides you security by knowing that you are completely covered for life at a set premium. In whole life insurance, all you need is to keep up your monthly payments.
Cost comparison between term and whole life insurance
However, if we talk about the cost comparison, then it’s evident that term life insurance is cheaper and affordable as compared to universe life insurance. With term life insurance, there is no cash value, and the insurer doesn’t need to renew this policy. Moreover, the family of term insurance policyholder will not receive the payout at the end.
The whole life insurance costs more as it is higher and provides the coverage for your entire life. This policy has cash value and at the same time offer you a guaranteed rate of investment.