When to Choose a Whole Life Insurance Policy over a Term Policy?

Life Insurance plans provide financial security to the insured and their family. Life insurance plans come in various variants to suit different insurance needs of individuals. Whole Life Insurance Policy and term insurance are two of such variants of life insurance policies which provide coverage against death risk and ensure financial security to the family of the policyholder in their absence. Whole life insurance provides wider coverage than term insurance plans as term insurance provides coverage up to 75 or 80 years whereas whole life insurance plans provide coverage up to 99 or 100 years.

Some of the term insurance plans offer whole life coverage option in which you can choose the coverage of the term insurance plan up to 99 or 100 years. So the whole life feature is nowadays built-in in many term insurance plans but still both these plans are different and should not be confused. 

Whole Life Insurance Policy

A whole life insurance policy offers coverage to the insured up to 99 or 100 years of age. Whole life insurance policy is just like a term insurance policy with a distinguishing feature of coverage which is throughout the life of the insured individual. The sum assured is paid to the nominee of the policy as death benefit on the death of the insured. 

Term Insurance Policy

Term Insurance Policy covers the insured against the death risk during the specified tenure of the policy and does not offer survival or maturity benefit on the maturity of the insurance policy. Term insurance policy has an upper limit of 65 years or 70 years of age. Term insurance plans can be increasing sum assured, decreasing sum assured and return of premium policies. 

When to Choose a Whole Life Insurance Policy over a Term Policy

The whole life insurance policy offers a dual benefit of savings and returns in the form of the death benefit. A whole life insurance policy may be considered by you over a term insurance policy due to the following reasons: 

1. Whole life insurance helps the insured to build a corpus for his/her future needs with flexibility to choose the frequency of premium payment as well as withdrawals. Whereas term plans do not guarantee benefits. It is paid only if the insured dies during the term of the plan. 
2. Whole Life Insurance policy has various features as compared to term policy which is just pure protection plans. These plans come with a choice of various options that can be considered by you. A simple cover without participation in bonus called non-participating policy or with participation in the bonus of the profits of the insurance company known as a non-participating policy. 
3. Since whole life insurance plans do not have a definite period of coverage and it provides you assured financial security in which whenever the insured individual suffers death, the sum assured will be paid. However, in the term insurance plans the sum assured is paid only on the death of the insured individual during the term of the insurance policy. Hence, whole life insurance plans are more assured in the sense of financial security. 
4. If you have dependents and your responsibilities towards your dependents will extend to super senior years of your life then whole life insurance plan can be purchased by you over a term insurance plan. 
5. Whole life insurance plans offer both maturity benefit as well as a death benefit to the insured individual. That is if the insured individual survives the term of the insurance plan which is 99 years or 100 years, then the sum assured under the plan will be paid in lump-sum as maturity benefit. However, this is not the case with term insurance plans. As term insurance plans are a pure protection plan, no benefit is paid to the insured individual on the maturity of the policy. 
6. The loan can also be taken in whole life insurance plans as there is surrender value under these plans. This offers flexibility to the insured to withdraw the money for any financial need. The money that you borrow is like a loan which is to be repaid. If you fail to repay the loan amount, the cash value as well the death benefit of the whole life insurance policy will decrease. 
7. The premiums of the whole life insurance policy may be higher than term insurance policy but are fixed throughout the tenure of the policy providing stability as compared to lower but increasing and dynamic premium amount when the tenure of the term insurance policy is set to be renewed by the holder of the policy. 

Conclusion

The term insurance plans nowadays have the option of the whole life plans. You can choose to buy a term insurance plan which has offers such option and ensure coverage up to 99 years or 100 years of age. You can also opt to buy a whole life insurance policy and enjoy its distinct features. It is advised to compare the insurance policy online and ensure to buy the one which best suits your needs and requirements at affordable premium rates. Whole life insurance policies are best to be chosen if you want to secure your whole life and want to get assured returns.