Do you know what is the difference between whole life insurance and term life insurance policy? Well if not then this article is solely related to the same. In this article I am going to tell you about some differences between whole life insurance policy and term life insurance policy.
The modern day world is depleted of surety. Nobody can assure you of anything. In this world, if you are the only one earning for your family and your family is dependent on you, in such circumstances if something happens to you then your dependents have to suffer for whole of their lives.
The solution to this problem is various types of insurance policies offered by many insurance companies. There are mainly two types of insurance policies offered by insurance companies: term life insurance policy and whole life insurance policy.
What is the difference between whole life insurance and term life insurance policy?
In this article we are going to discuss some of the differences between term life insurance policy and whole life insurance policy.
1. Whole life insurance policy and term life insurance policy
Life insurance policies offer coverage with different terms and conditions related to different types of policies.
Term life insurance policies offer insurance coverage for a limited period of time. The time period is chosen by the policy holder at the time of buying the policy. Term life policies are of various durations like 10,20,30 years. Teen life insurance policy only offers the coverage if the death of the policy holder occur within the term period.
Whole life insurance policies offer the coverage for whole of the life to the policy holder. Whole life insurance policy also offer an advantage over life term insurance policy that it also give interest amount on the policy value to the policy holder.
Read Also: Benefits of life insurance policy
2. Choice of policy length
Another difference between term life insurance policy and whole life insurance policy is in terms of their policy length. Term life insurance policy offers the policy holder to choose the desired duration of time period for the policy opted by him.
The period selected for the term life insurance policy is the period in which the policy holder has to invest his premium for the opted policy and in the same period in which the coverage is offered to the policy holder by the insurance companies.
3. Life long coverage
Another difference between whole life insurance policy and term life insurance policy is in the terms of duration in which the coverage is offered by the insurance company to the policy holder.
Term life insurance policy offers coverage to it’s policy holder only within the duration chosen by the policy holder while buying the policy. After the term of the policy completes, no coverage is offered by the insurance company to the policy holder.
Whereas, whole life insurance policy offers coverage to the policy holder for whole of his or her life. Term life insurance policy is different from this in these ways.
Read Also: Different Types of Life Insurance Policy
4. Accumulation of cash value
As the term life insurance policy offers coverage to the policy holder only within the term period of policy. If the policy holder lives up to the term of the policy then no coverage is offered afterwards to the dependents of the policy holder and no values are given to them.
But the whole life insurance policy also offer cash values after the premium for the policy is completed. So, the cash value gets accumulated which can be withdrawn by the policy holder on deposition of policy shares, after that no coverage is offered to the policy holder.
5. Cost comparison
Another difference between whole life insurance policy and term life insurance policy is in the terms of cost of premium for both the types of policies.
The premium for term life insurance policy is relatively cheaper than that of whole life insurance policy as it offers coverage only for a fixed period of time which was chosen at the time of buying the policy by the policy holder. Also, term life insurance policy does not offer any cash values to the policy holder.
The premium for whole life insurance policy is costlier than that of term life insurance policy as it offers the coverage for whole the life to the policy holder. Also, it offers cash value to the policy holder.
So, term life insurance policy is cheaper than whole life insurance policy.
Read Also: Advantages of Life Insurance Policy
These were some of the major differences between term life insurance policy and whole life insurance policy on the basis of which you can choose which type of life insurance policy is better for you and your family.
