Term vs. Whole Life Insurance

Jan 04, 2018 | 2 years ago | Read Time: 2 minutes | By iKnowledge Team

Life insurance is of many types. Some of these range from Unit Linked Insurance Plans (ULIPs), term policies, and endowment plans to permanent life insurance policies. Permanent life insurance policy is also known as whole life insurance policy. Although both term and whole life insurance policies provide life insurance coverage, there are a number of differences between them.

Here’s what you need to know about whole life insurance vs. term insurance policies:


The major difference between the two is the time frame. While a term insurance is generally valid for only a certain amount of time, a whole life insurance policy is valid for your entire life. With a term policy, if you pass away during the tenure of your policy, your nominee will receive the death benefit. However, if you outlive the tenure of your policy, no death benefit is received. On the contrary, a sum assured is guaranteed in the case of a whole life insurance policy.


The premiums you pay towards a whole life insurance policy are higher as compared to the premiums paid towards a term policy. This is mainly because a whole life insurance policy comes with a cash value and longer tenure.

 Cash value

Cash value means that after a certain number of premiums have been paid towards your policy, you are able to borrow cash from it. While a whole life insurance policy allows you to do this, a term insurance policy doesn’t. This is another feature of term vs. permanent life insurance.

Both term insurance and whole life insurance have their own advantages and disadvantages. If you’re looking for good coverage but are on a tight budget, a term insurance policy is ideal for you. This policy is especially beneficial for sole earning members of the family. However, if you are looking for an insurance policy that offers life coverage and has an investment component to it, then opting for a whole life insurance policy is a better idea.          

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