In case of life insurance there are two basic type of insurance which one can take one is term insurance and the other is called whole life insurance. One should have knowledge of what are the main differences between the two before making a decision on which plan to take.
1. Term insurance can be defined as that insurance which gives protection for a limited period of time only which is decided on the basis of payment which the insured has made. While whole life insurance is one which offers protection for the entire life of a person or up to 100 years whichever comes earlier.
2. Under term insurance, if insured dies during the life of the policy then the sum assured is paid to the beneficiary which the insured has mentioned in the insurance documents, however if insured does not die during the policy then he or she does not get any maturity benefit from the policy. Under whole life insurance policy as some portion of premium paid goes towards the investment into equity markets the insured will get maturity benefits under this plan unlike that of term insurance.
3. Term insurance is the cheaper than any other form of life insurance including whole life insurance.
Apart from above there can be many points which differentiate the two and it also varies on the basis of various terms and conditions which insurance company’s can attach to various policies offered by them to the person seeking insurance.