Let’s be honest; life insurance is not the simplest policy type you could be taking out; although it is one of the most essential. There are plenty of different providers and plenty of different benefits to each one; as well as their own pros and cons.
Today, we’re going to break life insurance down into two of the main categories; whole life insurance and term life insurance. These are easily two of the most popular types of plan around, and we’re going to compare both, so you can easily see which one is right for you.
To get started, let’s explore the differences between both policy types, and what benefits and processes that can bring into your life.
What is Whole Life Insurance (WLI)?
As the title of this policy type suggests, whole life insurance (typically referred to as just ‘life insurance’) will cover you for your entire life. When you pass around, you’ll be provided with all the death benefits that come with the policy, as well as a cash accumulation that may have built up over the years.
When you apply for life insurance, you’ll need to pass a health examination, or you can pay a higher fee to skip it. With a whole life insurance policy, you’ll be thinking about the long-term benefits of the policy. Policies are most effective and beneficial when they last between 12-15 years and is a great way to help you plan your estate.
While whole life insurance policies are initially expensive to take out, over longer periods of time, they work out to be one of the cheapest and more affordable, but it takes years to get there.
What is a Term Plan Life Insurance Policy?
Unlike WLI, a term plan is purchased for a set duration of time, usually ranging in increments of 5, 10, 20, 30 years and so on. This is also the easiest type of insurance to buy, doesn’t require health examinations, and can be used a temporary coverage, say if you’re going on holiday.
However, unlike WLI, these policies only pay out the death benefits of the policy and won’t come with cash accumulation. These types of policy also become a lot more expensive once you reach the age of 50 or over and must be renewed if you want to keep it going.
There are also some perks to these policies, where you can convert it into full life insurance and can finish if you no longer require it.
Which Policy Type is best?
When comparing the two policies, there’s a lot to consider. However, in short, if you’re older and you’re looking to cover yourself if you pass away from an accident, old age, or illness, and you want your family looked after, a whole life plan would be best. This is also the best type if you’re over 50 years old.
If, on the other hand, you’re looking for short-term cover, and you just want to protect yourself from accidents, a term insurance plan would be most suitable. Say you’re going abroad for a few years, on multiple holidays or enjoying a dangerous pastime, covering yourself in the short-term is best through this kind of plan.
Summary
When it comes down to choosing which insurance type is best for you, there’s plenty of things you can think about.
However, at the end of the day, you’ll want to make sure that you’re checking with the provider for an accurate list of benefits and perks that each policy provides. What’s more, don’t forget that it pays to shop around!
About AEGON Life
Launched in July 2008 with pan-India operations, AEGON Life Insurance Company Limited has a vision to be the most recommended new age life insurance Company. As a joint venture between AEGON – world’s leading financial services and Bennett, Coleman & Company – India’s leading media house, AEGON Life Insurance adopts the power of global expertise to facilitate a direct to customer approach, leveraging digital platforms to bring transparent solutions, and to prioritize customer’s needs. Our product portfolio includes term life insurance plan, pension plans, unit-linked insurance plans (ULIPs), health insurance plans, child education plans, and more.
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Why the term life plans are cheap while buying and become expensive at the time of renewal?
Great points! Indeed, a whole life plan is suitable for those who are older.