Term insurance vs life insurance..
Which one will you choose…?
Though you have a tough decision to make but hope your query will be solved with this simple comparison..
|Term Insurance vs Life insurance|
|Features||Term insurance||Life Insurance (Whole life insurance)|
|What is it..?||It’s a part of Life insurance that insures you for a fixed term.||It’s an insurance policy with no fixed term|
|How long you can stay insured||For the term of the policy. |
Suppose you have taken an insurance for 20 years then you will be insured for 20 years only
|You stay insured for your whole life.|
|Death benefits||They are provided, but only if an insured dies within the policy period. |
But if an insured dies after the policy expires then the family won’t receive any death benefits.
|Since insurance is effective for the whole life, thus the family will surely receive death benefits.|
|Affordable||Term insurance is very affordable. |
Infact it is the only insurance policy with premium at its lowest.
|Premium can be a lot high and can sometimes be 10 times the premium of term insurance.|
|Maturity benefits||Normally you don’t get any maturity benefits in a pure term plan. |
But if you still want that then you can opt for add-ons
|Life insurance policy never matures and stays with you throughout your life.
But if you want to terminate the policy in-between then you get cash value of the part of the premium paid so far + interest it accrued.
|Predictable premiums||Premiums are predictable only for the term of the policy. |
Thus if you have taken a policy for 20 years then your premiums will stay same only for those 20 years.
But when you would want to renew that policy, then the premium amount will change.
|Premiums are highly predictable.
It stays same for your whole life.
|Investment benefits||It’s a pure life cover plan. Thus it only covers your life and keeps insurance and investment separate.||Life insurance would be like “Death benefits with savings account”.
Thus on death of the insured the family is ought to receive death benefits.
But if the insured terminates the policy while he is alive, then he gets cash value with interest accrued over time.
|Tax benefits||You get tax benefits on premiums as well the claim amount received by the nominees.|
They are exempted from tax.
|You get tax benefits both for your premium paid as well as on the claim amount.|
|Which one is better..?||Term insurance is only meant to cover your life and thus you get higher sum assured with lowest premium possible. |
Thus you secure your family for the cost of nothing.
Low premiums are its biggest advantage.
Thus if you don’t want to mix investment and insurance and are tight on your budget too then term insurance is the policy for you.
But if you are still concerned about your money going waste in a term plan then you can buy add-ons like “Return of the premium” and your entire premium will be returned at maturity with little extra cost.
|Premiums are really high in a life insurance policy. And this is so because:
1) An insured is being provided with guaranteed death benefits and,
2) He gets cash value after a set period.
Since the benefit of savings account is also being provided by the insurer thus your premium amount shoots up.
Thus if are comfortable in buying a life insurance for such high premium just to get the benefits of savings account then you are most welcome to invest in life insurance.
|What is worth buying..?||For me term insurance works really well as I know what I am paying for.|
If I am concerned about my investments then maintaining them myself will reap me more benefits.
|If you want absolute guarantee that your family remains financially safe regardless of the term of the policy then life insurance will work really well.|
Term insurance vs Life insurance: What they are and what they mean to you..?
Term insurance is no more than a simple and uncomplicated life cover that gives you pure life insurance for a specified term.
If something happens to the insured within that time frame then his family always remains financially secured. All his debt obligations are then obliged by the insurer leaving the family mentally safe and sound.
But if the insured survives then no benefits are generally passed and the policy expires worthless. Thus to stay insured and reap the benefits out of your policy, you renew it with different term and premium.
Term insurance is generally the most basic type of life insurance plan but you still can complement it with variety of add-ons available. To suit everyone’s need term insurance plans comes under different heads, you can check them out here.
And one’s you decide which one to go with then you might want to find how to choose your best term plan. Here this post will help you as here will find 10 most crucial things to look at before buying your plan
It is a much broader term and even includes term insurance as one of its main category. Life insurance policy’s especially whole life insurance is specifically meant to insure your life regardless of any term.
Generally these policies are not fixed for any particular term and thus stay active for whole life.
They not only provide death benefits but also keep your money safe till you pay your premium. And once you plan to forgo your policy then the cash value is given back to you with all the accrued interest accumulated. But the cost to avail such a facility sometimes can put a dent in your pocket.
What experts think….?
If we have to go by what experts have to say about term insurance vs life insurance then they consider term plan as to be more appropriate. This is because for an average individual it is more about money, thus the more he can save the better it will be for him. And term insurance provides him just that:
- It saves him money by making lower premium and
- It hands over more of the sum assured at some unfortunate event.
However, it doesn’t in any way mean that term plan suits everyone. If you keep investment point of view in mind and still needs insurance at the same time then life insurance works best. This way you will be able to encash your life cover if you would want to later in your life and if you don’t then death benefit will always remain active.
Now its you to decide what you want for yourself…?