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Written by Money Mata - aka - Damodhar Mata
on July 03, 2013

Know the difference between the Term Life and Whole of Life Insurance

We all have heard of the Quote "Horses For Courses"; likewise different solutions are required to address different protection needs.

When considering buying life Insurance, you are most likely presented with the one or more of the following options;

  1. Term Assurance
  2. Whole of Life Insurance
  3. Endowment Plans

The following video and table helps you understand the difference between a Term and Whole of Life Insurance.

Click here to read about Endowment Plans

Sl. No

Whole of Life Insurance

Term Insurance

1
Aims to provide protection
for the entire lifetime.
Aims to provide protection
for a specified period of time (e.g., 5, 10, 15, 20, or 30 years) at an affordable cost.
2
Accumulates a cash value, that 
can be withdrawn partially or fully in lieu of cover for the balance period
Does not accumulate cash
value, premium paid is written off as expense.( Like Car Insurance)
3
Is very flexible, Cover
amount or premium can be increased or decreased, premium holidays allowed.
The amount and the benefits
are fixed throughout the life of the term assurance, no premium holidays are allowed.
4
Used for long term insurance needs, like family protection or personal life cover.
 
Preferred by business owners / partners as Key Man Insurance to protect their business, as a retirement age for partners or owners cannot be defined.
 
Also preferred by young people, who are looking for a long term cover, to protect against loss of income due to death, disability and critical illness.
 
Used widely for estate planning, and by investors having multiple property investments and mortgage more than 20 years
Usually used to cover mortgages, business loans, or time defined goals like children's education or marriage, for a term less than 20 years. 
 
Highly recommended for people who are old  and want to supplement an existing, whole of life plan. 
 
Critical Illness and permanent total disability are the only riders available on a term plan  
5
Living benefits like
hospitalization cover, Long term care, Family Income Benefit, and dismemberment cover can be added as riders, along with Critical illness cover and Permanent Total disability.
Critical Illness Cover and Permanent total Disability cover can be availed as riders on Term Assurance
6
The plan's performance is
based on market linked investments, hence expert advice and regular review is required to obtain the desired results from a whole of life plan.
Has no investment options, does not need a regular review to maintain the term assurance plan
7
The best whole of life products available in the market are; Zurich International Life's Futura, Met Life Alico's Future Protect, Royal London 360's Life plan.
Zurich international Life's International Term  Assurance, Friends Provident International's International Protector Middle East are some examples
8
Salama has both Islamic and Conventional Options for the whole of life cover called as Hyat Plus and Lifelong Plus,
respectively
Met Life Alico has two variants of Tem Assurance, one with level term cover for normal financial goals, and the decreasing term cover, used exclusively for mortgage
or business loan protection.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

To know more about the term or whole of life insurance, and to help you choose the most suitable protection plan, arrange a free consultation with Damodhar Mata

Click Here to Arrange a Free Consultation

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