Tuesday, 26 June 2012

Is Term Life Insurance Better Than Whole Life?

Term life insurance and whole life insurance are two competitive products in insurance industry. But there is a question among the insurance customers is that which one is better, whether it is Term-life insurance or whole life insurance. But these two policies have difference features and uses. Both term-life insurance and whole life insurance are pure insurance and there is no investment factor in it. Term-life insurance gives life-insurance cover for a particular tenure only, but whole life insurance gives a permanent life cover.

Life-insurance is not for the insurer but for the dependents of insured. If any unfortunate event, untimely death happened to the insurer, the sum assured is given to the dependents or nominee which is supposed to be a support to the dependents to overcome the financial loss due to the death of the insured.

Term life insurance policy

This is the simplest and pure form of insurance. The term-life insurance is for a special period only and the nominee get the sum assured only if the death of the insured is happened within the specified period. This may call temporary life-insurance. The insurance terms are varying from 5 years to 30 years and most of these policies can be converted to permanent life insurance policies.

Features of Term life polices:-

Lowest premium

High sum assured

Insurance cover for a predetermined period

Suitable to protect mortgage loans

Whole life insurance policy

Whole life insurance also called permanent life insurance. Just like its name the policy protects the insured for his or her whole life. The life cover may use for last expenses of the insured or for the retirement purpose. But the premium is high that term life insurance. The insurer can insure his life for a particular sum assured and the premium should pay accordingly. The insurer can choose onetime premium option also.

Features of Whole life policy:-

Insurance cover for whole life

Option for one time premium

Can use for final expenses

Can use for retirement income

Not for short period

Now the insurer can decide which one is better. But both are good for its special needs and circumstance. A term life insurancecan be converted to whole life insurance, if the terms and conditions of the insurance policy allows.

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