Life insurance, that is, life insurance, is a type of commercial insurance that takes human life as the object of protection. Life insurance on the market is divided into whole life insurance and term life insurance according to different insurance periods. Since the two are different in terms of suitable population, insurance amount, and protection time, if you don’t know enough about this, you may purchase a product type that is not suitable for you. . So, what are the differences between whole life insurance and term life insurance? These 4 points should be known.
1. Whole life insurance
Whole life insurance is an unscheduled death insurance policy that provides life-long protection for the insured. After the protection takes effect, no matter when the insured dies, the insurance company is required to pay the insurance benefits by the contract.
2. Term life insurance
Term life insurance only covers a certain stage of the life of the insured. During the agreed protection period, if the insured dies, the insurance company will pay the corresponding insurance benefits by the contract; if the contract expires, the insured will still be alive, the contract is automatically terminated.
3. The difference between whole life insurance and term life insurance
1. The nature of insurance is different
Term life insurance focuses on providing protection. The insured pays the insurance premium to the insurance company, which is equivalent to paying the insurance company to assume the insurance liability in the agreed period and transfer the possible losses caused by the death of the insured in a short period. It is suitable for people with lower budgets. The family insures the breadwinner of the family.
Whole life insurance provides lifelong protection for the insured, and at the same time has an asset reserve function. When the insured passes away, the designated beneficiary will receive a death insurance benefit, which can realize the directional inheritance of assets.
2. The guarantee period is different
Whole life insurance, as the name suggests, is to protect the life of the insured.
The insurance period of term life insurance is more flexible, usually 10 years, 20 years, and 30 years.
3. Different premiums
Because term life insurance and whole life insurance have different coverage periods, the premiums they need to pay are also different. Generally, short-term, consumer-based term life insurance has lower premiums than whole life insurance.
4. Suitable for different objects
Term life insurance is characterized by obtaining high protection through low premiums in a short period. It is more suitable for ordinary families with limited financial conditions but also needs to purchase protection.
Whole life insurance is to protect people’s lives, which is equivalent to long-term asset reserves, and the premiums are not low. It is more suitable for people with wealthy family conditions and the need to inherit assets.
The main difference between whole life insurance and term life insurance is the above 4 points. Although on the whole, whole life insurance has a longer coverage period and wider coverage than term life insurance. But buying insurance is to mitigate possible future financial losses, not to impose financial burden protection on the family. Therefore, when choosing life insurance, you should start from your economic income and expenditure, and choose a product with an appropriate premium without affecting the normal life of the family. At the same time, when choosing the insured, it is recommended to give priority to the insurance for the financial support of the family, to give the family more comprehensive love and protection.