People have realized the importance of having a life insurance policy, as you never know what the future holds. Life is uncertain, and while you are alive, it is advisable to secure your family’s financial well-being by purchasing the right insurance plan.
Every individual has a different purpose to buy a life insurance plan. Young people may invest in an insurance policy to provide monetary security for their dependents. Conversely, senior citizens purchase insurance if they have outstanding liabilities. A term insurance plan and whole life insurance policy are among the most popular life insurance products that seniors can consider purchasing.
There is a vast difference between these two plans. Therefore, it becomes necessary to understand the various features and benefits offered by them before investing. Remember that buying the wrong insurance plan can hamper your finances and jeopardize the economic well-being of your family members. So, to help you decide which one out of the two policies can be ideal for you, we have compiled a list of differences.
What is a term plan?
A term life insurance plan provides life coverage for a specific duration. A key offering of a term plan is that it offers a substantially high coverage value at a pocket-friendly premium. It does not provide any maturity benefits and only gives the death benefits to the nominees if the policyholder dies untimely within the policy tenure.
As term insurance offers life cover for a particular period, it is a wonderful option for seniors. For instance, a person with an outstanding liability like a home loan has to pay installments for a few years. In such a circumstance, he or she can purchase a term plan. It ensures that the dependents do not have to bear the burden of the debt if an untoward incident results in the policyholder’s demise.
What is a whole life insurance plan?
A whole life insurance policy is the complete opposite of a term plan because it offers life coverage until the policyholder is alive. Besides providing life coverage, this policy helps you to build a corpus over time to meet future financial needs. Such a plan is ideal for seniors who want to save money to accomplish their life goals.
A key plus point of a whole life insurance plan is that you can surrender it anytime and you will receive a lump-sum. Additionally, it has the facility wherein you can avail of a loan against the policy. This can prove handy during financial emergencies.
Term plan or whole life insurance plan – Which is more suitable?
Both term plans and whole life insurance plans have their pros and cons. The term insurance premium is low when compared to the latter. Moreover, the sum assured of a term plan is much higher than a whole life insurance policy. Seniors can consider buying term life insurance if they have temporary financial issues. Additionally, this policy is appropriate for seniors who want to leave behind a considerable inheritance amount for their grandchildren. However, this policy does not give any monetary value on survival.
On the other hand, the sum assured of a whole life plan may not be sufficient to fulfill the family’s financial requirements or clear the liabilities. This plan is suited for those who have permanent problems. Here, seniors can withdraw funds partially according to their needs after they have completed the premium payment duration.
Now when you know what is term plan and how it differs from whole life insurance, you can decide which plan can help you in accomplishing your financial objectives at a later stage of life. You can even buy both the plans and diversify your investments to meet your family’s short-term and long-term aspirations.