Term Insurance v/s Whole Life Insurance

February 17, 2025

5 mins read

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Disclaimer : ABSLI Nishchit Aayush Plan (UIN No 109N137V12) is a non-linked non-participating individual savings life insurance plan.
^ Provided 0 year deferment & Annually in Advance payout frequency is chosen at the time of inception of the policy. Annually in Advance payout frequency is only available in "Annual" premium payment mode. ^*Male- 25 yrs invests in ABSLI Nishchit Aayush Plan with Level Income + Lumpsum Benefit. He chooses premium payment term 10 yrs , policy term 40 years, benefit option -Long Term Income, Sum Assured 7 times of Annualized Premium and Deferment Period 0 years. Annualized Premium is ₹1,00,000 (Exclusive of GST.). Annual Income of ₹ 32,750 (32,750*40=  13,10,000) + Maturity Benefit (₹20,00,000)= ₹ 33,10,000 ADV/3/24-25/3076.

Table of Contents

No matter how much you make, you need to take care of these two things in life - meeting your goals while keeping up with rising costs and protecting your family's financial future. Life insurance serves both needs in a very effective way. It is one of the most important financial investments you will make in your lifetime.

The market is flooded with many types of life insurance policies. Among these, term insurance and whole life insurance offer the most basic and comprehensive life insurance coverage.

By understanding how these two types of life insurance policies differ, you can make an informed decision and choose the one that best fits your needs.

Let's have a look! ?

Term Insurance

Term insurance is the purest form of life insurance that offers financial protection to your loved ones against life’s uncertainties. By paying your premiums on time, you will be able to ensure that they receive a fixed sum of money if you pass away during the policy period.

The claim amount can help your dependants fulfil their financial goals, meet everyday expenses, settle existing loans and liabilities, pay for your child's education, etc.

However, in case you survive the policy period, you won't receive any benefits. This is because term insurance is a pure risk cover.

Whole Life Insurance

Whole life insurance, as its name implies, covers you throughout your lifetime (until you are 99-100 years old) and ensures guaranteed financial security for your loved ones. It is a great way to leave a financial legacy, a parting gift for them.

It provides guaranteed# returns in the form of:

Death Benefit - If you pass away during the policy period, your family will receive the insurance cover amount as a death benefit.
Maturity Benefit - If you survive the policy period, you will be paid the maturity benefit. The maturity age in whole life plans is usually 99 years.

Difference Between Term Life Insurance and Whole Life Insurance

	Term Life Insurance	Whole Life Insurance
Policy Period And Coverage	Covers you for a fixed number of years.	Covers your for your entire lifetime - until you are 99 or 100 years of age.
Objective	It is intended to protect your familys financial future and ensure they live a comfortable life - even in your absence.	The primary purpose is to make sure that your family is financially secure by leaving behind a legacy for them. You can also opt for this plan to protect a family member who will be dependent on you for a lifetime, for instance, a child with special needs.
Premium	Premiums are comparatively lower.	As the coverage lasts a lifetime, premiums are comparatively higher.
Benefits	Here, only a death benefit is provided.	Guaranteed^# returns are provided.
Maturity Benefit	You don't get anything back if you survive the policy period.	You receive a maturity benefit if you survive the policy period.
Cash Value	Cash value is not generated under term insurance.	Some insurers provide a cash value for every premium payment you make. You can use this to make future premium payments or borrow against it.
Loan Facility	It is not possible to borrow against term insurance policies.	On expiry of three completed years of policy coverage, you are eligible to avail of a loan against the policy.

Wrapping up! - H2

That's all from our side. Having learned the difference between term insurance and whole life insurance, we are confident that you will be able to select the one that best suits your needs. Before investing your hard-earned money, ensure you read the policy wordings carefully to know what's covered and what isn't.