Whole Life Insurance Vs Term Life Insurance: Which is Better to Choose

term insurance vs life insurance

Life and health insurance policy concept idea. Finance and insurance.

Both term life insurance and whole life insurance is designed for offering financial protection when you are in emergencies. Life is full of moments which we share and enjoy with our beloved family members. There might be unforeseen circumstances which will spoil those memories you make with your loved ones. 

Life insurance is a step which you take today for securing and safeguarding your loved ones at such unforeseen circumstances. Life insurance plans now are easily affordable by everyone that will help you in preparing yourself and your loved ones for contingencies without putting you on financial pressure.

When you want to have your loved ones’ future secured, then a life insurance plan will be the most critical financial planning you will need. You should give yourself and your loved ones financial independence in the rise of unforeseen circumstances. On the whole, you can say that life insurance offers risk cover for your loved ones by securing them financially when you are not there.

Life Insurance Types:

Life insurance is of two different types which are as below:

Whole Life Insurance:

Whole Life Insurance is also said as permanent insurance, and this gives you life long coverage. When compared to that of a term life insurance, this plan has higher premiums. A whole life insurance policy is known to have a cash value feature which also serves as an investment tool. 

With the whole life insurance policy, you will be able to withdraw money that has been accumulated in the form of premiums after a specific period of your policy tenure. But you should deposit the funds back, or else it will affect the death benefit of your policy which will drastically reduce. To be precise, a whole life insurance or permanent life insurance provides you and your loved ones with financial support and protection.

Whole Life Insurance Pros:

Guard You For Life:

Permanent life insurance lasts up till you pay a premium. This life insurance tenure survives until you are alive. So, the death benefit for this insurance will be higher, which will ensure that you will get good financial backup in times of emergencies. 

Motivates Your Savings:

As you will be paying regular premiums, this type of policy will motivate your savings habit a lot better.

Return On Investment Is Available:

A permanent life insurance policy comes along with a cash value feature where you can get some amount from the premiums you have paid after a certain period of your policy. Also depending on the plan you choose and the market status, you will earn dividends. So this policy also serves as a great investment tool.

Whole Life Insurance Cons:


The initial premiums for a permanent life insurance plan is a bit high-priced. So when you are someone who doesn’t want high insurance cover, then this is not the right choice for you. When you are someone around 25 years for investing in a term life insurance plan, then later it can be converted to a permanent life insurance plan so that you can save on the high initial premiums.

Very Complicated:

A permanent life insurance plan provides versatility and customisation on the design depending on the investors need. That’s the reason why the requirements and goals of permanent life insurance are complicated compared to that of a term life insurance.

Cash Value Might Be Less:

Though growth is guaranteed for a permanent life insurance plan, the cash value for it will be meagre. That means that you will get a sum assured, but the returns will be at a lower growth rate. 

Term Life Insurance:

A term life insurance policy is a plan which comes with a specific time frame. Under this policy rules, it’s said that your loved ones will get death benefit when you face any unforeseen circumstances and the policy is still active. When there are no emergencies when the policy is active, then there will be no benefit received by either you or your nominee. This policy is just a simple, protected plan without any investment element to it. 

Term Life Insurance Pros:

Value For Money:

The premiums for this life insurance policy is affordable so that you can purchase this in large sums. The term life insurance policy will ensure to give you the full value for money.

Extremely Required Coverage:

A term life insurance plan covers you financially when you need it the most. When you have education expenses for your kids, loans to pay off or any other things which your loved ones don’t have financial access to in your absence, this plan will be helpful for those. If you don’t have any loved ones, then you can cancel your term life insurance plan. 

Term Life Insurance Cons:

Your Policy Term Might End Quickly:

The term life insurance policy has a very shorter time frame, so your policy term will end, and so it will outlive you. So make sure to select a term life insurance policy which has high tenure to be wise in your decision.

Don’t Have A Cash Value:

A term life insurance policy is not suitable for wealth accumulation and investment. It solely is a protection plan which doesn’t have any cash value. When you outlive the policy, you will get nothing from the insurance provider.

How Much Life Cover Should I Get?

The primary purpose of life insurance, whether its a term life insurance or permanent life insurance is for ensuring that your loved ones will live securely when in some unforeseen circumstances. You should make sure to get a life cover who pays off your debts and still have a substantial income for your loved ones when you can’t support them financially.

For Instance, when your annual earnings are Rs.15,00,000, then multiply it with 12, which will be Rs.18,000,000. After that, calculate the outstanding loans and subtract it with any savings you have.  If you have a debt of Rs.12,00,000 and a fixed deposit of Rs.10,00,000, your standard monthly expense for your family will be Rs.50,000. Then with the above calculation, you can see that you will need a life cover of Rs.1.8 crores. 


Make sure to know your requirements thoroughly, then analyse between the pros and cons of both the insurance plans, that will make you know which method will best suit your financial stand and requirements.

Leave a Reply

Your email address will not be published.