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Term vs. Whole Life Insurance Plans

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If you are planning to buy a life insurance policy, you have probably heard of both term insurance plans and whole life insurance plans. While essentially providing benefits in case of the insured’s (policyholder) demise during policy tenure, these plans vary in a lot of ways.

Term insurance

Term insurance is a type of life insurance wherein premium is paid by the insured for a fixed period of time during which death benefits will be paid out in case of the insured passes away. In case the policy matures, no benefits are paid out to the respective beneficiaries. Therefore, term insurance policies are sometimes called as pure life insurance policies where you receive high sum assured by paying nominal premium for a fixed tenure. Individuals also receive flexibility when choosing sum assured or tenure.

However, the benefits of term insurance are very limited as compared to other life insurance policies. For one, there is no maturity or survival benefit available with term insurance plans. This is not a good option if you are looking at life insurance policies as savings or investment instruments, rather than purely for the death benefits provided to your beneficiaries.

Whole life insurance

Whole life plans are complete life insurance packages that provide flexibility in choosing sum assured, tenure etc. while providing survival and/or maturity benefits according to policy documents. In these policies, the premium may be collected for a specific tenure or throughout the life of the insured.

Resulting benefits include the ability to ‘borrow’ money from the insurance company at low rates of interest, receive a lump sum as survival benefit, receive segregated payouts of the premium, get maturity benefits etc. Essentially, whole life insurance policies are meant to provide cover to the insured throughout his/her entire lifetime.

Difference between Term and Whole Life Policies

Premium
  • Term insurance policies can be availed by paying lower premiums than whole life policies.
  • Premium is constant throughout the policy tenure in case of whole life plans, while term insurance policies employ dynamic premiums when the term of the policy is set to be renewed.
  • Premiums will not be refunded in any scenario in term insurance policies unless a genuine claim against death of the insured is made, in which case a hefty sum assured will be paid out. Whole life plans provide premium payouts in case the insured survives the policy tenure as selected while buying the policy.
Tenure
  • Term plans offer fixed tenures during the course of which the benefits of the policy are applicable. Whole life have flexible tenures usually applicable till the insured reaches 100 years. Benefits will be paid out when the insured turns 100.
Cash value
  • In case of whole life terms, the premiums paid by you are invested in your protection fund as well as in other investment avenues. If the insurer makes profit on these investments, they declare a bonus a part of which is given to you. Term insurance does not have this feature.
  • The cash value that is built through your premiums in whole life plans can be utilized to receive loans at low interest rates. The interest is collected and kept by the company while the base loan amount is deducted from your sum assured. This does not affect future premium amounts. Term plans do not provide this benefit.
  • Whole life plans act as both savings and protection plans while term insurance is a pure life insurance plan with no additional benefits apart from death benefits.

So, What Should You Choose?

Ideally, if you are an unmarried individual in your 20s or 30s, a term plan is the best option for you. These plans will offer you decent protection for reasonable premium payments. Also, if you have pressing health issues, term plans are ideally placed for getting the highest benefits in the short term.

If you are a married person with 2 kids, a mix of whole and term life represents a great choice. You can do this by buying a term rider on top of the whole life policy. On one hand, the whole life policy offers you cash value that can be used at various points of your life, while the term rider will protect your dependents with high monetary benefits.

If you are an applicant over the age of 40 years, whole life policies will be the best fit for you. The plan will provide cover all throughout your life, while effectively being cheaper than term plans at this stage of your life. Apart from this, you can be confident that your next generations are left with good inheritance when you pass away.

Term vs. Whole Life Insurance Plans Reviews

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  • LIC Life Insurance
    "GOOD"
    0.5 4.0/5 "Great!"
    The life insurance policy has been taken from the LIFE INSURANCE CORPORATION OF INDIA where it gives the maturity is for long term policy also added on that the premium i pay for this policy which is satisfactory. The policy is very good.
    Was this review helpful? 0
    , bangalore
    Reviewed on Dec 15, 2018
  • HDFC Life Life Insurance
    "GOOD"
    0.5 3.0/5 "Satisfactory"
    I am not satisfied with the service of the HDFC LIFE where i have purchased the life insurance policy with this HDFC LIFE. I have started using it from past few years where the policy is very good. They give the fake promises for this policy....
    Was this review helpful? 0
    , bangalore
    Reviewed on Dec 15, 2018
  • Bajaj Allianz Life Life Insurance
    "Safe plan for future"
    0.5 5.0/5 "Blown Away!"
    I have life insurance with Bajaj Allianz, I used to pay Rs. 12,000 for one year policy, it has the tenure of 40 years, Its a totally term plan for the value of 1 crore, they give lump sump amount to the nominees, the claim ratio is good and also terminal waiver on premium.
    Was this review helpful? 1
    , pune
    Reviewed on Dec 14, 2018
  • SBI Life Life Insurance
    "Best ULIP Policy"
    0.5 5.0/5 "Blown Away!"
    I have purchased a market based policy 2 years ago. I have chosen SBI LIFE because it was suggested by my friend. I pay the premium amount of Rs. 10000. I make the premium through online. The growth was pretty good and tenure period of the policy is 10 years.
    Was this review helpful? 1
    , bangalore
    Reviewed on Dec 14, 2018
  • LIC Life Insurance
    "Best policy in LIC"
    0.5 5.0/5 "Blown Away!"
    My money back policy was taken with LIFE INSURANCE OF INDIA. I pay the premium amount of Rs. 5000 in a month. I have selected LIC because of the returns. I make the premium through ECS. Total tenure period of the policy is 25 years. My friend has referred me about this policy
    Was this review helpful? 1
    , bangalore
    Reviewed on Dec 14, 2018
  • LIC Life Insurance
    "Good LIC policy"
    0.5 5.0/5 "Blown Away!"
    I'm just paying the premium and i have never get the sum assured amount and i will get it after 25 years of tenure period. I'm making the premium through ECS. I pay the premium amount of Rs. 5000 every month. I will get a coverage value of Rs. 1.27 Cr.
    Was this review helpful? 1
    , bangalore
    Reviewed on Dec 14, 2018
  • Bharti Axa Life Life Insurance
    "Best Policy"
    0.5 5.0/5 "Blown Away!"
    I have taken life insurance from the Bharti Axa life as it has good returns i make the payment through on-line banking annually . This policy covers accidental and critical illness benefits with the tenure period of 15 years . Overall am satisfied with my policy .
    Was this review helpful? 0
    , faridabad
    Reviewed on Dec 14, 2018
  • LIC Life Insurance
    "Useful policy"
    0.5 4.0/5 "Great!"
    In the month of February, i have purchased a money back policy from Life Insurance corporation of India. I pay the premium amount of Rs. 15000. Last time i have paid the payment through cheque and in future i make through online. One of sister who is working as a LIC agent has referred this policy.
    Was this review helpful? 1
    , bangalore
    Reviewed on Dec 14, 2018
  • LIC Life Insurance
    "Useful policy"
    0.5 4.0/5 "Great!"
    I have purchased a term insurance policy 1.5 years back. There is no particular reason for choosing the LIC. I pay the premium amount of Rs. 26000 and i have chosen the annual payment mode. Sum assured amount was Rs. 70 lakhs. Total tenure period of the policy upto 70 years of my age.
    Was this review helpful? 1
    , bangalore
    Reviewed on Dec 14, 2018
  • LIC Life Insurance
    "Average Policy"
    0.5 3.0/5 "Satisfactory"
    I have a life insurance policy with LIC from last 4 years and it is a long term policy. I pay my premium once in 6 months through direct payment and i am convenient with the payment options. Tenure period for this policy is 18-20 years. The returns and benefits are good in this policy.
    Was this review helpful? 1
    , ghaziabad
    Reviewed on Dec 14, 2018
  • LIC Life Insurance
    "GOOD SERVICE"
    0.5 5.0/5 "Blown Away!"
    I have purchased the life insurance policy with the LIFE INSURANCE CORPORATION OF INDIA where the name of the policy is ENDOWMENT PLAN and i am using it from past 10 years. The maturity period of this policy is till 67 years of my age. This gives the policy coverage of 4 lakhs.
    Was this review helpful? 0
    , bangalore
    Reviewed on Dec 14, 2018
  • LIC Life Insurance
    "Good Policy with Life Coverage"
    0.5 5.0/5 "Blown Away!"
    I have agent who coordinate with me for my life insurance, they are responding well, the customer support is good, they have different payment options. The policy name called Jeevan labh its for 15 years I get the benefits as lump sum amount with life cover.
    Was this review helpful? 0
    , bangalore
    Reviewed on Dec 13, 2018
  • LIC Life Insurance
    "Good service"
    0.5 4.0/5 "Great!"
    I have been using my life insurance with Life insurance corporation of India,the agent had clearly explain me about the policy coverage, plan benefits etc, there premium amount they have charged me was nominal,they charged in quarterly basis,overall service is good.
    Was this review helpful? 1
    , hyderabad
    Reviewed on Dec 13, 2018
  • HDFC Life Life Insurance
    "Fine policy for emergency purpose"
    0.5 5.0/5 "Blown Away!"
    Along with my personal loan they have provided me a life insurance policy from HDFC LIFE. I have to pay the premium amount of Rs. 6000 in a year. I used to pay the premium through online. Total tenure period of the policy is 4 years. I'm getting a sum assured amount of Rs. 3 lakhs.
    Was this review helpful? 0
    , gurgaon
    Reviewed on Dec 13, 2018
  • SBI Life Life Insurance
    "Best Policy"
    0.5 5.0/5 "Blown Away!"
    I took this Life insurance from Sbi life mainly because of the good returns. The payment am doing through online every year through online payments . The best about the policy is it covers accidental coverage and critical illness There customer service and customer response is also good.
    Was this review helpful? 0
    , bangalore
    Reviewed on Dec 13, 2018
  • LIC Life Insurance
    "Best Policy"
    0.5 5.0/5 "Blown Away!"
    Based on the benefits and returns i have chosen this life insurance corporation of India . I am satisfied with the amount which am making for the policy . Am making the payment yearly through online . This policy cover accidental benefits . Overall am happy with it.
    Was this review helpful? 0
    , faridabad
    Reviewed on Dec 13, 2018
  • LIC Life Insurance
    "Good policy"
    0.5 4.0/5 "Great!"
    I have purchased a life insurance policy in my wife's name. 5 years back i have bought the Jeevan saral policy with Life Insurance Corporation of India. Since its a better company, i have selected the LIC. I pay the premium amount of Rs. 5400. Its a long term policy. I have selected the annual payment mode.
    Was this review helpful? 0
    , mumbai
    Reviewed on Dec 13, 2018
  • LIC Life Insurance
    "Best Service"
    0.5 5.0/5 "Blown Away!"
    I am using LIC using thee policies same policies life insurance coverage and two more different policies i am never contact customer Service for everything contact with agent only Responsiveness very good , Promised Interest Rate is less in LIC but trust worthy , Fees & Charges is use to pay by agent only. Hence i can give rating 5 for best service
    Was this review helpful? 0
    , ahmedabad
    Reviewed on Dec 13, 2018
  • IDBI Federal Life Insurance
    "Very Good"
    0.5 4.5/5 "Excellent!"
    IDBI Life cover policy for my children there is more benefits in this policy i have to pay 30k every year after his age of 16 partially amount will received for his education after few years for marriage and in risk factor also amount will provide once terms will complete total Amount will be received in 3 terms for this policy.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Dec 13, 2018
  • LIC Life Insurance
    "Very good"
    0.5 4.5/5 "Excellent!"
    I am using Life Insurance policy and need payment in six month once i am happy with LIC insurance policy . Since long time i am using Life cover policy so i am only trust to LIC for Life insurance payment is made in cheque and sometimes in cash which one collected by agent for service i can give rating 4.5 very good service.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Dec 13, 2018
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