The main purpose of getting Life Insurance is – if the breadwinner of a family dies, his dependents should not suffer in his absence. There are many types of Life Insurance policies. Some people say ‘Buy Term and invest the rest’ while others invest in assets like Whole Life plans. Needless to say, both plans are great. This article will give you a detailed comparison between the two so that you can make an informed decision and buy the best-suited plan for you.
What is Term Insurance?
Term Insurance is a pure risk plan that promises death benefit only. Risk cover ends once the policy term is over.
What is Whole Life Insurance?
A Whole Life plan is essentially a Life Insurance that offers to cover you for life as long as the premiums are paid on time. The risk cover remains in force even after the maturity of the policy.
Let’s look at the key differences between the two so that you can make an informed decision.
| Parameters | Term Insurance | Whole Life Plan |
| Cover | Premature Death | Premature death plus survival upon maturity |
| Premium | Cheapest type of Life Insurance | It generally costs 5 to 15 times the Term insurance for the same risk cover |
| Savings component | No savings | You get a maturity corpus |
| Tax Benefits | Tax rebates under Section 80C. The death benefit is also tax-free under section 10(10D) | Tax rebates under Section 80C and maturity benefit are also tax-free under the section 10(10D) |
| Objective | To provide pure risk cover | Savings with risk cover for life |
| Flexibility | Since it provides only death benefits, there is no flexibility | Flexible |
| Risk cover | Till the policy term | Till policyholder survives or up to the age of 99 |
| Loan facility | No | Yes |
These are the key differences between the two plans. Now you can make a sound and informed decision considering your financial goals, retirement plans, and the amount you want to invest.
If you need any further guidance, our trained insurance advisors at MyInsuranceClub will assist you with all your queries. You can Compare Term Insurance Online at myinsuranceclub.com
