Term life insurance VS whole life insurance, which one should you choose?

Term life insurance VS whole life insurance, which one should you choose?

The choice of term life insurance or whole life insurance is determined according to the actual needs of the buyer.

What do term life insurance and whole life insurance have in common?

Both are life insurance, that is, insurance that protects against death liability.

In layman’s terms: during the insurance period, if death occurs due to an accident or a disease after the waiting period, the life insurance pays the insurance benefits according to the selected insurance amount; some life insurance not only protects the death but also protects the disability.

What is the difference between term life insurance and whole life insurance?

(1) Differences in the insurance period

The insurance period of term life insurance, as the name suggests, is a specific period, usually 20 years, 30 years, or until the age of 60 or 70. If the insurance period has passed and the insured is alive, the insurance contract will be terminated naturally, the insurance company will no longer be liable for the insurance, and the insurance premium will not be refunded.

Whole life insurance is covered for life. That is to say, after the insurance contract is concluded, the whole life insurance will receive 100% compensation (except for the liability).

(2) The difference in rates

The insurance period of these two products is different, which also determines their different rates.

Term life insurance has cheap premiums and high leverage ;

Whole life insurance will payout, so the premiums are much higher.

Generally speaking, term life insurance is insured until the age of 60, and the premium is almost one-eighth to one-tenth of the whole life insurance under the same insurance amount.

(3) Differences in the role of safeguards

Since the responsibilities and prices of the two are different, their roles must also be different.

Term life insurance is designed to allow people to obtain high protection with very cheap premiums at a stage of life with heavier responsibilities. This avoids the risk of the insured leaving early and leaving the family without financial resources.

The design of whole life insurance is to use higher premiums to provide lifelong protection: no matter when you die, you can bring a certain amount of insurance money to your family. In this way, it can protect and inherit wealth while providing personal value protection. 

Who are term life insurance and whole life insurance suitable for?

Based on the characteristics of the two, the scope of application also varies from person to person.

Term life insurance is more suitable for ordinary families

There are old people on the top, small ones on the bottom, mortgages and car loans, and salarymen who bear the main source of family income. They are very suitable for regular life insurance. They are at the time of the heaviest responsibilities in their lives. In case of any emergency, the pressure of repayment of the house, the pressure of children’s education expenses, and the pressure of maintenance expenses of the elderly will make the whole family overwhelmed.

Owning term life insurance is cheap, will not occupy too much household expenses, and the insurance amount is still high, which can cover the family’s economic expenses. Take a certain term life insurance on the official website of Sunshine Insurance as an example, people around 30 years old buy 1 million insurance amount, Guarantee until the age of 60, covering the life stage with great responsibility, only needs more than 1,000 yuan per year, which will not occupy too much family expenses.

Whole life insurance is more suitable for families with “not bad money”

High-net-worth individuals who do not have the pressure of debts such as mortgages and car loans, have sufficient cash flow, and have sufficient premium budgets can purchase whole life insurance. These people have a certain economic foundation and hope to bring an income to their family after their death and pass on the family wealth.

By Master James

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