Life is a beautiful gift of God yet engulfed with so many uncertainties that can create potential abnormalities in your life. To save yourself and your loved ones from such potential risk, life insurance is the one-window solution to curb such threats. Buying life insurance doesn’t mean that you are giving up on life and live in depression as at any point of time you may encounter death.
Life insurance is about enjoying life with peace of mind and directs you to be pro-active towards life uncertainties. It means that today, you are here for your family meeting up their expenses and pampering them with all the resources you have. But, the uncertainty of life in unstoppable and what in future you are not there for them. Who will support them in that time of distress and need. Your family was suffering from emotional trauma, do you want them to suffer for the rest of their lives for financial needs as well. The answer must be NO. In this scenario, life insurance comes as a handy solution for all such uncertain circumstances.
Life insurance is a broad category, it is mainly classified into term life insurance and whole life insurance in addition to some of the other investment related life insurance categories. Both of these categories offer protection against pre-mature death, offering a payout to your loved ones so that they will not be in financial ruin and many other protections plans.
Let’s have a look at term life insurance and whole life insurance in detail and illustrate in what circumstances you should buy a term life insurance vs a whole life insurance.
Additional Reading: Key Things to Consider Before Buying a Term Life Insurance Plan
Term Life Insurance Plan
Term life insurance, as the name implies provides coverage for a specified time period (a specific term). It provides benefit to your dependents only if you die prematurely during the timeframe for which you have taken the term life insurance. As the agreed time period collapse your dependents will not be provided with any fund or monetary benefit. You choose the term when you are buying the policy. The most common terms are 5, 10, 15 or 20 years. A variety of supplementary coverage is also attached with the term life insurance subject to the company policy which includes waiver of premium, permanent and total disability.
The benefits of term life insurance are as follows:
– It provides you coverage for lower initial cost as compared to the whole life insurance
– It the best option for those people who want to secure their family in case of a sudden death of the insured. As your sudden death won’t deprive your loved ones of the basic necessities of the life through the coverage.
– Offers you a best way to manage your temporary life insurance requirements
The drawbacks of term life insurance are as follows:
– The major drawback is, it is for a specified time period and will eventually vanish after the specified time period.
– There is no cash value available to you if you survived within that time frame.
– Whilst reviewing it for the next term, the premium may change
This term life insurance is suitable for those individuals who want to pay less premiums and aiming to have a temporary coverage such as for 3 years, 5 years etc.
Whole Life Insurance Plan
As the name proclaimed, whole life insurance provides you immunity as long as you are alive. It expires with the death of an insured. Before that it gives certain benefits which you can cash within your life time and a hefty amount to your dependents after your death. In whole life insurance, your family receives a lumsum cash amount against the regular premiums paid by insured during his lifetime. Your investment grows with the passage of time and you won’t be paying tax on such gains. It also helps you in saving the taxes. Besides this, it is known as policy cash value.
The benefits of whole life insurance are as follows:
– It provides you coverage against all potential risk for life time irrespective of the age
– It is also an investment plan which helps you in accumulating your wealth and builds your financial position
– Whole life insurance also offers savings with highly competitive offer and tax benefits on your investments.
The drawbacks of whole life insurance are as follows:
– The major drawback is it comes with a high premium price and high subsequent monthly installments depending upon the policy wheel you agreed to.
It is suitable for all those people who have a family and want to ensure that after the insured person’s death, the beneficiary family will receive a lumsum fund that can help them to deal with major financial needs of the family and children.
In a nutshell, life insurance provides you coverage against all potential odds of life. We have discussed both term life insurance and whole life insurance along with its pros and cons. It depends on your own circumstance, which option you avail as per your current financial position and requirement. At Mawazna.com we help you in comparing different life insurance products and choose the best for yourself and your family.
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