Chinese people avoid talking about life and death, which is one of the reasons why many people resist insurance, especially life insurance that deals with death. But the death of a person brings not only mental trauma to a family but also an economic crisis. At this time, life insurance is very important. In fact, for every adult, it is necessary to have life insurance. After all, if you protect yourself, you can better protect your family.
Life insurance is divided into term life insurance and whole life insurance depending on the coverage period. So what is the difference between term life insurance and whole life insurance?
1. The nature of the guarantee
Term life insurance only protects for a certain period. If the insured dies unexpectedly within the specified period, the insurance company will pay compensation to the beneficiary; if the insured person is still alive when the insurance contract expires, the insurance company will not be liable. Liability to pay compensation and no refund of premiums.
Whole life insurance is guaranteed for a lifetime, and the insured can receive an insurance benefit equal to or even more than the insured amount regardless of death due to an accident or disease.
2. Guarantee period
Term life insurance generally has a period of 10 years, 20 years, or the agreed age of 65 years and other options.
Whole life insurance is insurance that provides life-long protection for the insured until the end of the life of the insured.
3. Suitable for the crowd
Term life insurance is more suitable for people with lower income and higher insurance needs ( usually from family responsibilities ), allowing everyone to get the most protection at lower premiums during the most serious family responsibilities.
Whole life insurance is more suitable for policyholders with strong premium affordability and estate planning needs. Because the insurance payment is to the designated beneficiary, it can not only be distributed according to the wishes of the policyholder but also protected by law. In addition, whole life insurance can be purchased for saving and protection. Although whole life insurance can only get compensation after death, it has savings and can generate cash value. At present, there are many additional bonus functions of whole life insurance, which can be used as a variety of savings and protection. If you need money during the insurance period, you can take a policy mortgage loan to get some of the money back.
All other things being equal, whole life insurance rates are higher than term life insurance, but the coverage period is longer.
Term life insurance offers low rates, no cash value, and higher death coverage for less money. It should be reminded that, because term life insurance only protects for a fixed period, the insurance policyholder will have a greater increase in premiums due to age when the insurance policy expires and the subsequent period. However, before the insurance expires, the insured can choose to convert part or all of the insured amount into long-term life insurance or whole life insurance, and there is no need for a new medical examination.
Term life insurance can obtain higher death protection with less money. Due to the flexible choice of the insurance period, it can meet the protection needs of consumers in a specific period. Whole life insurance has long-term protection and a certain saving function. Which one to choose depends on your financial conditions and your budget.