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Whole Life vs. Term Life - An Overview

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Published: 19Feb2012
Word count: 533
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Since insurance is all about giving money for something that cannot be seen or felt, people generally have a repulsive tendency because people do not really want to spend money on something which they cannot use immediately or something that they cannot use at all. But since insurance is necessary, people often buy insurance policies but they hardly know the difference between the whole life and term life insurance. The debate of whole life vs. term life has long existed and haunted people. Whole life and term life are two different types of insurance and it is essential to understand the difference between the two.

Remember that both whole life and term life insurance have one thing in common. In both the cases, the beneficiaries get a lump sum payment from the insurer in case of the death of the policy holder. The money helps the beneficiaries to deal with financial problems which they may face in case of death of the insured person. Apart from this similarity, there are differences between the two types of insurances. We will take a look at the differences in this article.

Whole Life vs. Term Life Insurance

Whole Life Insurance Plans: In this type of insurance plans the insurers will actually provide a lump sum amount of money to the beneficiaries of the policy holder if the person insured faces unfortunate death. The insurer will investigate into the cause of death and if the cause matches any of the pre-mentioned causes of death in the policy document, the insurer will provide a lump sum amount of money to the beneficiaries. The beneficiaries can actually use the money to face the financial doldrums they face in the absence of the deceased policy holder. However, apart from this, if the policy holder survives the term of insurance, the insurer will still provide a lump sum amount of money to the policy holder either on the maturity of the policy or when the policy holder retires. It is because of this survival benefit that the policy holder needs to pay extra amount of money as premium. This explains why whole life insurance is costlier than the term life insurance. It is now time to learn about the term insurance.

Term Life Insurance Plans: This plan on the other hand will give the death benefit which is same as the whole life insurance and the entire procedure remains the same. There will be investigation on the cause of death of the policy holder and only when everything goes as per the rules and regulations of the policy, the insurer will pay the lump sum amount of money to the beneficiaries. However, there is no survival benefit. This means that if the person insured lives the complete term of the insurance, nothing will be paid to the person or the beneficiaries. It is because of this reason; the price of term insurance is less that whole life insurance.

Now, you need select the type of insurance that you need. This will depend on various aspects like budget, liabilities and more and hence, make sure that you evaluate every aspect properly.

Next, learn more about whole life vs term life from one of the most popular resourceful websites on the internet.

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