Is term insurance better than life insurance
If something unfortunate were to happen to the breadwinner of the family, it can lead to the family’s financial plans and dreams going haywire. The right Life Insurance policy acts as a safety net and protects your loved ones from a financial crisis if you meet with an untimely demise. Even if you and your partner both earn, protecting your lives with the right Life Insurance policy is essential for maintaining your current lifestyle, if something unfortunate were to happen to either of you.
While most people recognise the need for Life Insurance policies, they are overwhelmed by the huge array of products and policies in the market.
In this article, we put an end to one of the most asked questions about Life Insurance – term vs whole life insurance –which one should you choose?
What’s Term Life Insurance?
A term plan is the basic form of Life Insurance. It offers financial protection to family members if the policyholder passes away during the term of the plan. Usually, these plans provide coverage for up to 10, 20, 30 or more years. There are no other benefits offered.
Pros of Term Insurance Policy:
The premium you pay is often lower compared to other Life Insurance policies
Offers financial protection to your spouse and children in case of your untimely death.
What’s Life Insurance?
This is the umbrella term for all Life Insurance products including Term Insurance. Other popular Life Insurance policies include endowment plans, Unit Linked Insurance Plans (ULIPs), whole Life Insurance, retirement plans and more.
These policies provide more than life cover. They also act as investment products. For instance, consider the retirement plan. If the policyholder passes away during the term of the plan, the family members receive death benefit just like in Term Insurance. Unlike Term Insurance, the retirement plan provides maturity benefits, which the policyholder can receive after the completion of the term. This is an excellent tool to plan for retirement.
As you can see, Life Insurance policies offer added benefits apart from life coverage.
Pros of Other Life Insurance Policies:
- Provides you with other financial benefits like maturity benefits, loan on policy, bonus, annual payouts and more, apart from the basic life coverage
- Inculcates the habit of saving, helping you build a corpus over the years.
Term Insurance versus Life Insurance — which one to choose?
Different types of Life Insurance policies are designed to suit specific needs and your Life Insurance needs to keep changing during different stages of your life. So analyse your current requirements and pick the right policies that suit you best.
Term Life Insurance may be best suited for you in the following situations:
- If you’re looking for a pocket-friendly, affordable policy that offers life coverage
- You require life cover only till a particular stage in life, say till your children complete their education and become financially independent.
Look for other Life Insurance policies in the following cases:
- You need a reliable tool for investment along with life cover
- You wish to provide your children and spouse with financial protection after your death while ensuring that you gain other benefits from your policy
- You’re looking for wealth management.
Which is better? Term Insurance versus Life Insurance:
As mentioned above, both these policies cater to different requirements. Ultimately, the decision to choose the basic vanilla Term Insurance or other Life Insurance policy depends on your specific financial goals and requirements.
By choosing the right Life Insurance policy, you can meet the financial objectives at different stages of your life as well as be assured that you’re leaving behind a legacy that will offer protection to your loved ones. Understand all the differences between Term Insurance and Life Insurance and pick the right one that suits your financial goals perfectly.
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