If you have been comparing insurance policies available in the market today to zero in on the best life insurance plan for your family, you might have come across term insurance plans as well as whole life insurance plans. Both of these are meant to provide a life cover to the policyholder, however, it is important to understand which one would suit your financial requirements before you purchase a policy for yourself.
A term plan is a no frills, pure protection plan in which the premium paid by you is used to provide death benefit to your dependants in the event of your untimely demise in the future. The beneficiaries are not entitled to any benefits upon policy maturity or if you survive the tenure of the term plan. However, you are given the freedom to choose your policy term and sum assured. You can even get a term policy with a high sum assured for a cheaper premium subject to certain conditions.
Whole life insurance
This is a comprehensive insurance plan that not only promises benefits once the policy matures or you survive the term of the policy, but also comes with the flexibility of choice of tenure and sum assured. The insured can also take a loan at lower interest rates and even opt for the maturity payout in a staggered way or as a lump sum. This is the best life insurance plan that gives you financial protection for the lifetime.
Parameters to help you make your choice:
The following pointers will help you evaluate which insurance plan is best for you as per your needs:
A term plan usually has fixed policy duration to avail the benefits while flexible tenures until the policyholder is 100 years of age are a characteristic of whole life plans. Policy maturity or survival benefits in the latter are paid out once the insured completes 100 years.
Premiums paid by you towards a whole life plan double up as an investment. Your insurance company can declare a bonus in case it makes profits and offers you a loan at competitive interest rates. In the latter, the loan amount is subtracted from the sum assured as the insurer accumulates interest. Hence, whole life insurance plans allow you to invest your savings while providing protection from uncertainties in the future.
A term plan is the best life insurance plan if you are in your early 20s or 30s and still single. The earlier you buy one, the cheaper it will cost you to get a policy with a high sum assured. Also, if you have any existing health concerns, term plans promise better returns in a short time frame.
Are you in your mid to late 30s and married with kids? You should top the existing term insurance policy with a whole life rider. This gives you the twin advantage of the cash value that comes with the former and the monetary benefits of the latter to your family in your absence.
If you are in your 40s and above, you should go with a whole life plan as opposed to a term plan which will be more expensive at this stage of your life. A whole life policy would cover you for the lifetime and also add up as inheritance for your future generations after your demise.
So choose the best life insurance plan keeping the above information in mind. For starters, you can look at iSelect+ Term insurance plan that covers death and critical illness and pays out benefits in case of death or on diagnosis of Terminal Illness, whichever happens earlier. In addition, it offers various additional benefits such as Accidental Death Rider and Child Support Benefit Rider. It also offers several useful features such as return of premium and tax benefits on premiums paid.
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