The Basic Difference between Whole and Term Life Insurance

Shiva was the CEO of a company. He put his heart and soul into his job and worked hard to make sure the organization continued to make a good amount of profits. He was blessed with a loving wife and two beautiful children. Three weeks before his fortieth birthday, he began to experience a shooting pain up his left arm. He went straight to the hospital, where he was told that he was about to have a heart attack. Preventive measures were taken and Shiva survived the scare. However, it got him thinking about life and all the things that really matter.

At the end of the day your job and company are not the things that matter, there will be thousands of executives just like you, who will be more than happy to take over the company you work for. However, your family cannot replace you so easily. Hence, it is extremely important for you to have a plan in place, to make sure that your family maintains financial stability, in case anything was to happen to you.

It is extremely important to take up a good life insurance policy. This will provide your family with financial aid and help them to have a sense of security. When a family member passes away, it can be extremely traumatic, and having to worry about finances, is the last thing anyone needs. With a policy in place, the family will either receive a periodic or a lump sum payment according to their requirements.

Life insurance in India can be broadly classified into whole life insurance and term life insurance. It is important to understand the benefits of each, in order to pick a plan that will suit your needs. The basic difference is that a term policy is offered for a fixed period, while the alternate spreads over the entire life of the insured. However, let us look at the finer details of each plan.

A whole life plan is a combination of insurance and investment. A part of the premium is invested in bonds, while the rest is set aside for insurance purposes.  When the insured passes away or reaches a certain age, he and his family is entitled to the entire amount of the policy. This type of policy can be on the expensive side of the scale.

On the other hand, a term insurance policy is easy on the pocket and the insured pays only what is necessary and not a Rupee more. The policy is taken for a fixed period of time. If anything were to happen to the insured during this period, his family would be entitled to the amount of the policy. On the other hand, if the term were to elapse, the insured will not receive any payments.

Insurance companies offer coverage for clients who are above the age of sixty at higher rates of premium. Hence, it is necessary to take this into consideration while selecting a short term insurance plan. With all this information, you can make an informed decision about which policy will be best for your needs.