There may be a wide range of life insurance plans available today. But for someone who is looking for pure life insurance policies, term life plans and whole life plans are some of the best options. These plans offer a life cover, with no additional aspects, such as investment or savings, making them suitable for people wanting to keep it simple.
Term Vs. Whole Life Plans
Each of these two choices, whole life plans and term life plans, have some exclusive features that make them appealing to different consumers. When choosing between the two, it is essential to understand the differences so you can decide what is right for you.
To begin with, the most fundamental difference between term life plans and whole life plans is the duration of the life cover offered. You may buy online term plans for their lower cost or buy them offline if you don’t mind spending a bit more. But these plans offer a limited cover. Most plans extend their life cover till 70-75 years of age.
On the other hand, whole life term insurance offers coverage up to 99 years of age. This may affect the rate of premiums, which tends to be higher than term plans. Nonetheless, these plans appeal to a significant section of people.
If you are wondering whether whole life term plans are right for you, over buying online term plans, which tend to be more affordable, take a look at the features of whole life plans and who should buy these.
Whole Life Term Plan Benefits
Getting a whole life plan may be a tad bit costlier than level term insurance. Thus, before you choose, here is a look at whole life term insurance benefits.
- Longer Life Cover
Having a life cover for up to 99 years of age means that you can live your working years as well as your post-retirement years in a carefree manner. You will not feel the need for another insurance after retirement, as may be the case with term plans.
- Steady Premiums
Whole life plans require you to pay regular premiums. Thus, your premiums will remain the same for the length of your chosen duration. As the years pass, your income may grow, and the regular expense of the premium may start to seem more affordable.
- Maturity Benefits
Unlike level term plans, most whole life term insurance benefits will include pay-outs on maturity. If the life assured survives policy maturity, i.e., they live over 99 years of age, they can expect to receive a lump sum from their policy, after which the insurer will close the policy. Maturity benefits may vary slightly across policies. It is best to consult your policy document for details.
- Tax Exemptions
In the case of whole life insurance, customers can expect tax exemptions on premiums as well as benefits received. Consult your financial advisor to understand the tax benefits offered by your policy.
Who Should Buy Whole Life Insurance?
With the range of benefits offered, whole life insurance may appeal to a wide demographic. Should you opt for this type of policy?
Whole life plans offer a longer cover duration. If you expect to have dependents relying on you financially even in your retirement years, or you seek to leave behind a significant sum for your survivors, you may consider whole life plans.
It is also important to consider the higher premiums that come with whole life plans. If you can afford the premium expenses and are willing to commit to long-term, regular premium payments, this may be the right policy for you.
Whole life plans do not offer any investment avenues. Except for maturity benefits in the form of a lump sum payable upon surviving the policy, the life assured may not have any returns to look forward to. Thus, the policy is not suitable for anyone looking for added benefits from their life insurance.
When buying life insurance, it is essential to ensure that you are buying a policy as per your own needs, rather than something that you find accessible. Compare your options and ensure you can financially commit to a policy without burning a hole in your pocket.