Comprehensive Protection: Life Insurance vs Term Insurance for Your Family
Having an insurance policy is a must when it comes to securing your family's financial future. After your unfortunate death, the coverage amount will allow your family to meet the necessary expenses and be financially stable.
A term insurance policy is a pure type of life insurance policy. But to choose the right one for your family’s future, you must know the difference between both.
Understanding Life Insurance Policy
The policyholder of life insurance gets the entire lifetime coverage. You will get death benefits and savings components under the life insurance policy. Life insurance policies are categorised according to the various factors like coverage value and premium costs:
- Whole Life Insurance: It provides lifetime coverage, fixed premiums, accumulates cash value, and death benefits.
- Universal Life Insurance: This life insurance policy has a cash value component. The premium cost and coverage amount are flexible.
- Variable Life Insurance: You can invest the cash value in different options. Returns depend on the current market value.
What Benefits Do You Get with a Life Insurance Policy?
Before deciding upon an insurance policy, you should know the benefits your policy is going to provide. Let's discuss the pros of having a life insurance policy:
- Permanent coverage: A life insurance policy gives lifetime coverage to the policyholder as long as you are paying for premiums.
- Builds cash value: The cash value component is the main benefit of a life insurance policy. It can be withdrawn or used for loans.
- Death benefit: After your death, the beneficiaries will get lump sum coverage, which can help meet all the necessary expenses.
Apart from these benefits, high premium costs and its complicated structure leave people in second thoughts.
Understanding Term Insurance Policy
A term insurance policy is also a pure type of life insurance policy in which the nominee gets significant coverage after your death. It doesn't offer any savings or investment components and allows coverage for a specific period.
Benefits of a Term Insurance Policy
Term insurance for family is a more affordable and convenient choice if your budget doesn't allow higher premiums. Have a look at the pros of term life insurance policy before choosing your plan:
- Less premium cost: Term insurance plan is budget friendly and suits almost every wallet with significant coverage after the death of the policyholder. With a low premium cost, your loved ones will get good coverage.
- Flexible: You can decide the terms of the policy, which generally range from 5 to 40 years.
- Straightforward: As compared to the complicated structure of a life insurance policy, term insurance is quite simple.
- Death benefits: The nominee will get the coverage amount after your unfortunate death.
One drawback of term insurance is that beneficiaries will not get any benefit if they outlive the policy terms.
Choose The Right Option: Life Insurance vs Term Insurance
Go through the list of following factors and determine the right choice in terms of insurance plan :
- Premium cost: If you are comfortable with high premiums and your main goal is lifetime coverage, choose a life insurance plan. Otherwise, choose a wallet-friendly option: a term insurance policy.
- Duration: If you need the policy for a specific period, then go with a term insurance policy.
- Coverage: Life insurance provides lifetime coverage, whereas term insurance doesn't offer any benefit if you outlive till the end of the policy term.
- Investment and saving components: Term insurance doesn't provide these features, but life insurance does.
Conclusion
Life insurance provides lifelong coverage with a savings component, while term insurance offers more affordable protection for a specific period. Each type has its own advantages and limitations, so choose the right plan based on your needs to ensure comprehensive protection. You can also combine and alter the plan according to your requirements.
