HomeLife InsurancePermanent Insurance vs. Term Insurance: Which to Choose?

Permanent Insurance vs. Term Insurance: Which to Choose?

Insurance is a contract between two parties, wherein one party agrees to pay an amount in certain conditions provided the other one deposits some fixed amount regularly.

You have the options to buy different types of life insurance plans for your home, vehicles, and a property of any kind, health, life and more. However, a life insurance policy and health insurance for the whole family are must haves.

Life insurance is of three principal kinds, term insurance, unit-linked insurance plans and whole life insurance. You can browse among the various life insurance policy plans and choose among them according to your need and suitability.

What Is Term Insurance?

Basically, term insurance meaning is that the plan covers financial protection for a definite period of time.

The policy term is limited and the benefit is paid to the beneficiary if the policyholder dies within that term. It is the most popular kind because of the low premium rates. Term insurance ICICI and plans from other companies provide ‘value for money’.

The term insurance plans do not have any cash value or additional benefits. They do not offer significant returns on the investment.

The premium rates differ from company to company and plan to plan. The rates depend on the sum assured, policy term, age and sometimes, medical conditions. Use the Financegab.com term insurance page to check the plans from various companies.

Savings and Protection in Term Plans

Most companies, however, sell modified version of term insurance. These are endowment and money back plans.

With an endowment life insurance policy, you get the maturity benefit as well. So, this means that your money will be returned to you along with a bonus even if you survive the policy term. The same goes for money back policies, which give regular payments instead of a lump sum.

You can find such products among LIC term insurance plans and other companies too.

Why Whole Life Insurance Policy?

It is an ordinary life insurance, which is valid from its commencement up until the entire lifetime of the policyholder.

  • There are many variations sold by the public and private insurance companies
  • Usually, the premium rates are fixed and the amount is paid regularly until the very end
  • You can view the life insurance policy details to check if accidental death benefit, critical illness benefits and more such riders are offered
  • By comparing plans on the internet, you can know if a whole life insurance policy is economic or not

How to Choose Based on Features

The first consideration is your overall financial condition. Term insurance plans are cheaper compared to whole life policies. Then consider your age as the premium rates are often based on age.

Weigh in your current lifestyle, your health and the number of dependents while you decide on the policy. Term insurance premium calculators are available on almost all insurance portals.

You can hold multiple insurance policies at once; therefore, you could invest in a couple of different kinds. You can take risks to gain high returns with ULIP while maintaining an endowment life insurance policy on the side.

Also, check out the claim settlement ratio of the companies before buying.

Also Read: What Makes Term Insurance an Ultimate Choice?

Eligibility Criteria of Term Insurance

While choosing a life insurance policy, you also must check the eligibility details. Some are available for adults with 65 being the maximum entry age, while others can be bought for children too.

Sometimes, a term insurance or another such policy may lapse if the premium isn’t paid in a stipulated time. Again, there are factors like minimum sum assured and policy term to be considered. Use all the tools at your disposal to find the best life insurance policy with high returns.

The Required Documents to buy Term Insurance

The usual papers like attested copies of photo id proof, income proof, address proof and birth certificate are required to be submitted along with the policy application papers.

Similarly, while claiming, death certificate, policy documents, etc. are asked from the customers.

Claims Process of Term Insurance

The best part about buying term insurance or any other life insurance policy these days is the convenience of it all. You can buy online or call up the customer care and an agent is sent to your doorstep.

Most of the claiming process can be done online too. With a simple login, several the company websites give customers a trouble-free service.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


Most Popular