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19 March 2023

Difference between term life and whole life insurance

Your loved ones will benefit from life insurance if the inevitable occurs. While it can be tough to think about your own death, choosing the right term or whole life insurance policy can protect your household and allow you to leave a legacy to those you care about the most. Let us discuss some more differences between Term Life and Whole Life Insurance with the help of the comparison given below.

What is Term life insurance?

Term life insurance provides guaranteed death benefits to the beneficiary only in the event that the policyholder passes away during the term, which is a predetermined length of time. However, if the policyholder does not pass away prior to the term expiration, some term life insurance policies have a return of premium feature that will refund some or all of the premiums. Term life insurance policies with the return of premium are typically more expensive.

What is Whole life insurance?

The simplest type of permanent life insurance is a whole life policy, which gets its name from the fact that it offers protection for the duration of your life as long as premiums are paid. Because it has a cash value component, unlike term insurance, it is not a pure life insurance product. When a portion of your premium money is invested and grows over time tax-deferred, meaning you don't pay taxes on the gains, a policy has a cash value.

Term life Vs Whole life insurance | Difference between Term life and Whole life insurance

Basically in term life insurance initial premium is low but in whole life insurance initial premium is higher than in term insurance.

Eligibility for company dividend

Term life insurance - No, Whole life insurance - Yes, depending on the company

Guaranteed death benefits

In both of the insurance guaranteed death benefits are given

Premium over time

In-term life insurance premiums may remain the same or increase over time. While in whole life insurance premium is guaranteed to remain the same.

Health exam

In terms of life insurance, in most cases, a health test is necessary but depends on the amount taken. On the other hand, a whole life insurance health test is required.

Ability to withdraw cash value during the life of the policy

Term life insurance no cash value withdrawal during the life of the policy, whereas in whole life insurance, cash value withdrawal and also loans are allowed during the life of the policy.

Length of Coverage

Typically term life insurance cover 10-30 years. If you buy through work, coverage can be up to a termination age. In contrast, the whole life insurance length of coverage is a lifetime.

Thanks for reading the article. Still, if you have any questions or queries in your mind on the Difference between term life and Whole life insurance then please ask us in the comment section below.

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