Life insurance is a crucial component of financial planning. However, there is no one-size-fits-all cover. You need to understand your needs and buy a suitable policy that will meet those needs and offer you peace of mind. This is where the following article will help you out as it highlights the key difference between Term Life Insurance and Whole Life Insurance so that you can make informed decisions.
Life Cover Starting @ just ₹18/day*
Choose India’s Only Personalised Term Plan
Modify coverage as per your life stages & commitments
Hassle-Free Claim Settlement
99.38% Claim settlement ratio*
Smart Income Tax Savings
Save up to ₹54,600* on your taxes
Term insurance is a type of life insurance that provides life coverage to policyholders for a certain period, which is called the term. It could be 5, 10, 20 or more years.
Before purchasing term insurance, it is important to understand its characteristics and why you should choose them.
Whole Life Insurance is a type of permanent life insurance that provides coverage for the entire lifetime of the insured individual as long as premiums are paid. It offers both a death benefit and a cash value component.
With whole life insurance, your "cash value" increases over time. Consider this pool as a savings account within your insurance. If you require access before reaching the age of 100, you can take out a loan from it at any moment. What is the best part? The money your beneficiaries get after your death is tax-free.
Lets look at the key differences between Term Life Insurance and Whole Life Insurance. Note that these are generic points, please check applicable policy wordings for details.
| PARAMETER | TERM LIFE INSURANCE | WHOLE LIFE INSURANCE |
| Meaning | A Term Plan is the most traditional insurance plan that aims to provide death benefits to the dependents of the policyholder in the event of the policyholder’s untimely demise during the policy term. This is the most economical option as a high sum can be assured at an affordable premium. | Whole Life Insurance plans are crucial as they provide coverage to the policyholder throughout their life. These can also come with maturity and/or survival benefits (usually after 99 years of age) as a secondary feature. |
| Payout | The payout is received by the nominee if the policyholder passes away during the policy term. A Term Plan usually does not come with any maturity benefits unless some additional life insurance rider like the Return of Premium Rider has been added at the time of purchase. | The payout is received in the form of death or maturity benefits usually up to the age of 100 years. The policyholder can choose between a staggered payment option and a lump sum. |
| Permanent coverage | Only provided until the end of the policy term. | Provided, up to 100 years of age. |
| Premium | The premium paid is usually low as it does not have any investment component. The amount of premium paid towards the Term Plan may change upon renewal of the policy term. | Premiums are usually more expensive as the policy aims to build a cash value. Also, the premium amount does not change over the period of time. |
| Medical examination | May or may not be required depending on the conditions of the insurer. | Required. |
| Eligibility for loans | No | Yes |
The choice between Term Plan and a Whole insurance plan can be clearly made by looking at the policyholder’s individual needs. Here’s an example considering age and premium.
Here are some pointers to keep in mind while choosing Whole Life Insurance.
Here are some pointers to keep in mind while selecting Term Insurance.
There are different types of whole life insurance, each with unique features and benefits.
This insurance pays dividends on the insurer's surplus earnings. Dividends can be withdrawn as cash, used to lower premiums, or used to buy more insurance.
This kind has level premiums and a fixed death benefit for life. The primary benefit is predictable expenses, but it does not produce dividends.
Level Premium Whole Life Insurance provides guaranteed level premiums for life. Early premiums help in later years when annual payments are insufficient to cover escalating insurance expenses.
The policy is funded by a single lump sum premium payment made beforehand. This fully pays for the coverage, and no more payments are necessary.
Limited Payment Whole life insurance requires a certain period of premium payments (e.g., 10 years) but provides everlasting coverage.
Your payments change annually depending on the insurer's revenues and costs.
Similar to whole life insurance, term insurance offers a variety of options to suit different individuals' needs and preferences.
Level term insurance provides a fixed sum assured and a stable premium throughout the policy period. The death benefit stays unchanged, guaranteeing that the nominee receives a specified sum in the event of the policyholder's death.
Decreasing term insurance is intended to coincide with certain financial responsibilities, such as home loans or other ongoing debt. The sum guaranteed steadily decreases during the policy's duration, reflecting the reduced liability.
Convertible term insurance plans allow the policyholder to change their term insurance policy into another form of life insurance plan, such as endowment or whole life insurance, within a set time frame.
Renewable term insurance policies allow policyholders to extend their policy term after the initial policy matures. It provides the benefit of continuing coverage without requiring medical underwriting again.
Employers or organisations provide group term insurance to their workers or members as a kind of life insurance coverage. They often provide blanket coverage amounts to all members, avoiding the need for individual underwriting.
Talking about term insurance, ACKO Life Flexi Term Plan offers flexible coverage as you can increase or decrease your sum assured to provide your loved ones with a financially stable future. With minimum documentation required, you can be sure your loved ones will get financial assistance, giving them peace of mind and support when required.
Selecting the best life insurance coverage may be difficult, particularly if you have a lot of options. These insurance meet various financial objectives.
Whole Life Insurance vs ACKO Life Flexi Term Plan
| Situation | Recommended Policy |
| Need pure life insurance protection | ACKO Life Flexi Term Plan |
| Have maxed out other retirement savings options | Whole Life insurance |
| Budget-conscious and prefer lower premiums | ACKO Life Flexi Term Plan |
| Desire flexibility to adjust coverage as needed | ACKO Life Flexi Term Plan |
| Looking for long-term investment | Whole Life insurance |
| Uncertain about future financial needs | ACKO Life Flexi Term Plan |
| Prioritise leaving a legacy or inheritance | ACKO Life Flexi Term Plan |
| Prefer a fully digital, hassle-free experience | ACKO Life Flexi Term Plan |
| Need the ability to change beneficiaries easily | ACKO Life Flexi Term Plan |
When selecting the appropriate life insurance policy, individuals must evaluate their financial objectives, earnings, possessions, debts, and dependents.
Decide if you need insurance for retirement planning, asset accumulation, family protection, or any combination.
Recognize the many insurance options (such as universal life, whole life, and term), then select the one that best suits your requirements and financial objectives.
Examine premium prices to ensure they are within reasonable financial reach. To get the best deals, compare estimates from several insurance providers.
Take a close look at the policy's features, including the duration of coverage, available death benefits, payout schedule, and any extra benefits or riders that may be available.
Evaluate the insurer's financial stability by looking up their ratings for financial strength to ensure they can pay their bills in the long run.
Term insurance offers coverage for a specific period (the term), but life insurance covers your lifetime for higher premiums. This is the main distinction between the two types of insurance. Therefore, be sure the insurance plan you choose meets your needs. You can now confidently apply for the right insurance plan and secure the financial stability of your loved ones.
Here’s a list of FAQs related to Term Life Insurance vs Whole Life Insurance.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.
1.7K Linkedin Followers 
Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
Products 
Company
Legal
Support
Car Insurance 
Bike Insurance
Health Insurance
Group Health Insurance
Travel Insurance
Life Insurance
