Whole Life Insurance vs Term Life Insurance
It is important to know the difference between whole life insurance and term life insurance policies. One thing is for sure. Insurance has got so much to do with the word ‘term’. You prefer to take a policy or an insurance plan for a particular period of time, measure by the term of the corresponding policy. You will have to build up any insurance policy by means of the term you opt when you pick the type of plan. All major insurance policies can be bought for terms ranging from one year up to 30 years.
Being that the case, what then is the difference between whole life insurance and term life insurance? Term life insurance as the name itself indicates covers only your life. There can be no investment benefit attached to it. Whole life insurance plan has both the benefits. It has the life coverage benefit as well as the investment benefit. If you go for whole life insurance plan, then you would be entitled to get the benefits regarding the investment made by you in the policy through bonds or stocks, usually at the end of the term. Once you survive the term of the whole life insurance plan, you are sure to reap all the benefits pertaining to life coverage and investment as well. In case you do not survive the term of the policy, then the beneficiary is sure to reap the benefits of your life coverage and investment.
In the case of term life insurance policies, only the death benefits are included in the plans. You can opt for monthly payment of your life term insurance between one year and 30 years of term. Life coverage alone is included in the plan. Investment benefits are not included in the plan. It is interesting to note that many people opt for term life insurance in a bid to offer protection to their families in the event of their passing away or as a type of protection against the debts that they have incurred in their life.
There are three most common types of whole life insurance plans, namely, traditional whole life policy, universal whole life policy and variable whole life policy. You cannot expect many types of term life insurance policies though. Your job in the option of term insurance policy ends when you keep on paying the insurance amount for the period of the term. The rest is taken care of by the insurance company. In the case of whole life insurance policies you have got so much to choose from in terms of the additional features of the policies and riders attached to them. It is interesting to note that most of the whole life insurance policies are characterized by additional features that are normally attractive as well in addition to some beneficial riders such as accident benefits and benefits accruing in the case of disability. You can borrow a loan on whole life insurance policy but you cannot borrow a loan on term life insurance and this is one of the major differences between the two.