The main aim of a life insurance policy is to provide for your family in case the bread earner passes away. You can buy two types of life insurance policies – term life insurance and whole life insurance. While there is no universal policy that fits everyone’s needs, here are a few points to help you decide which one is right for you:
- What is Term Life Insurance?
A term life insurance provides insurance for a specified period of time. The coverage amount is paid out to the beneficiary if the insured person passes away during the policy tenure.
- What is Whole Life Insurance?
A whole life insurance is permanent insurance, it lasts for the entirety of the insured person’s life as long as premiums are paid. There is a fixed death benefit at the end of the policy that will be paid out to the nominee.
- Term Life Insurance vs Whole Life Insurance
- Premiums: Term insurance typically has lower premium costs which is great for people looking for affordable options. However, the premium amount keeps increasing during the tenure with term insurance while it stays the same throughout the tenure with life insurance, which typically has higher premiums.
- Requirements: One should always consider their requirements carefully before buying any type of life insurance. Term insurance is better suited for young adults as the initial premium costs are less and the policy can later be converted into whole life insurance. If you are above the age of 40, investing in a whole life insurance is the better idea. This is because it ensures life protection and financial security to your family
- Additional Benefits: It is important to note that term insurance has no maturity benefit so if the insured person makes it through the policy tenure, no amount will be paid out to the nominee. Whole life insurance, on the other hand, has a fixed death benefit along with additional tax benefits. In this type, money collected over time can also be used at the discretion of the policyholder.
Keeping the above mentioned points in mind along with your age and financial liabilities is the best way to figure out which life insurance is ideal for you. Take a look at the policies offered by ICICI, one of India’s most trusted insurance companies to get a better understanding of what these policies consist of. You can also give their plans a shot if they suit your needs!