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Is Whole Life Insurance Policy Better Than Term Policy?

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Life insurance is an integral tool, evident from the fact that almost one-third of the population in India has a life insurance policy. But life insurance also has several sub-categories, which are for the benefit of people who need different coverages. Two major policies are the whole life policy and term policy.

The benefits of both are debatable, but it is useful based on the requirement of the policyholder. Here you can find a solution to whether whole life insurance plans are better than term plans if you have trouble deciding which one to choose.

Term Life Policy and Whole Life Policy

A term life policy is the most basic form of life insurance, which doesn’t have many benefits other than life coverage. But this plan is cheap, so it allows everyone to have access to life insurance despite the financial situation.

The major point of attraction in the whole life policy is that there is a policy payment term but no policy term. It means there is a fixed duration between which you have to pay the premiums, but the life coverage is valid for the policyholder’s entire lifetime.

Advantages Of Whole Life Insurance Policy Over Term Insurance Policy

From the above description, one can deduce that the whole life policy is more advantageous. Below are the advantages of whole life insurance plans with respect to term plans. These advantages will help you further understand both these policies in detail.

Lifelong Coverage

A whole life policy provides lifelong coverage, which is not present in term insurance. However, the coverage is valid only until the age of 100, and after that, the policyholder will receive the maturity amount. So, this plan has assured returns.

Money Back Policy

A great feature of the whole life policy is its money-back policy. So, the policyholder will get back the entire invested amount. However, term insurance does not have a money-back policy. So, if a policy remains unclaimed during the policy term, there is no returning of the premium payments, and the investment will be in vain. But considering the low premium amount of term insurance, this is not much of a problem.

High Coverage

The coverage of whole life insurance plans is also very high than the term plan. It harms the premium payment because the premium will also increase. But considering the money-back policy of whole life insurance, an investor does not need to worry about the premium as long as it is within the budget.

Return On Investment

Some whole life insurance policies even provide a return on investment for the premium payments. It allows using the policy as an investment rather than a savings plan.

Extra Rider Covers

You can add only two riders to your term insurance policy. But in the whole life policy, there are several riders that you can add to your policy for your benefit.

Collateral For Loans

Some insurers also allow using the whole life insurance as collateral for a loan. Thus, giving you liquidity in times of need.

Partial Withdrawals

If the sums accumulated in the policy are high enough as per the insurer’s rules, you can also apply for partial withdrawals. These partial withdrawals are very helpful for emergencies. So instead of looking for other sources for the expenses, you can use your invested funds in insurance.

Knowing these advantages will help you realize that whole life insurance plans are better than term plans. Even if a whole life policy has a higher premium amount, the returns and life coverage are higher.

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