10 major differences between term insurance and whole life insurance

Whole life insurance is quite similar to term insurance. But there are some important differences.

Every person wants the best for his family. Thus, every person toils hard every day to make sufficient money for his family’s comfort. However, one may work hard all his life and still not be confident about the future: after all, what can the family do when its breadwinner is absent, and has gone without leaving too much money to fall back on?

This is why most people take life insurance. It is a reliable safety net for the future, ensuring that one’s family is taken care of in one’s absence. Your loved ones should not need to sacrifice their future dreams for lack of resources – and life insurance can go a long way in helping make these dreams come true.

However, most people gravitate more towards whole life insurance rather than choose term insurance in India. Term insurance is also a life policy. Though both term and whole life insurance provide life cover, there are significant differences between the two as outlined in the chart below:

Parameter	Term insurance	Whole life insurance
Tenure of the policy	A fixed term of time (say 10, 15, 20 years)	Till the life time of the policy holder
Benefits type	Death benefit only	Maturity benefits
Returns offered	No returns offered	Low returns offered
Affordability	Very affordable, with low premiums	Expensive, with high premiums
Good investment?	Not an investment policy	Yes, especially when timed with major life events
Market-linked?	No	Yes, especially with ULIPs
Bonus potential	NIL	Good, especially with claim-free policies
Tax benefits?	Premiums are not taxed	Premiums may be taxed
Surrender value	NIL. Policy is terminated when premiums are not paid	There may be a surrender value based on when the policy is surrendered
Revision option	NIL	Yes