Term Life Policy

Term insurance is a form of life insurance that insures against death or terminal illness for a fixed term as compared to Whole Life insurance that covers you for your entire life.

3 key features of Term Life policies

What are the differences between Term and Whole Life policies?

The following table illustrates the similarities and differences between these two types of life policies.

Term Life PolicyWhole Life Policy
What is the purpose?Protection against illness or accidentsProtection + potential to grow savings
What is the coverage?Most plans cover death and total permanent disability (TPD). Option to add on Riders (i.e. Critical Illness Rider)Most plans cover death and total permanent disability (TPD). Option to add on Riders (i.e. Critical Illness Rider)
What is the coverage period?Up to a specific period (e.g. 5 years) or up to a specific age (varies across insurers but typically covers till 65 or older)Usually up to end of life
How long do you have to pay for it?Throughout the coverage periodLimited payment periods of 10, 15, 20 or 25 years
What are the surrender terms and benefits?Coverage ends + no payoutCash value (guaranteed + non-guaranteed bonuses if any)
Which policy type is more affordable?More affordable than Whole Life but no surrender cash valueMore expensive than Term Life as it provides some cash value amount which you can borrow/withdraw against
What are the death benefits?Sum assured (if occurred within coverage period)Sum assured + accumulated bonuses if any

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