In today’s era, insurance is one of the essential needs that must be owned by everyone, both individually and as a family. This insurance is useful for transferring the risk to you to the insurance company you choose. However, what is the difference between term and whole life insurance?
Difference Between Term and Lifetime Insurance
One type of insurance that you must have is life insurance. This life insurance will provide protection for you and your family. This insurance aims to provide dependents if the main breadwinner in the family dies.
This life insurance will pay the dependents to your family in accordance with the contract that was agreed at the beginning of the agreement. Life insurance itself has two forms, namely term life insurance and whole life insurance.
Before you choose the type of life insurance product, first know the difference between term and whole life insurance.
Term Life Insurance
Term life insurance or known as term life insurance is insurance that can provide protection for a predetermined period of time. For example, insurance protection is used for a period of 5 years or up to a certain age.
After the insurance period expires, you can freely choose to continue the insurance protection period or let the protection end. The benefit of this bejanga life insurance is to provide protection with a predetermined period of time.
This, of course, comes with the risk of death, permanent or partial disability, as well as medical expenses and hospital care. In addition, the benefit of the cash value will also be received if the risk occurs outside the coverage period.
The advantages provided by this insurance are low premiums, a policy that can be extended if the validity period has expired, and you have stopped it because you don’t need it anymore.
This type of term life insurance is highly recommended for those of you who prioritize the future, especially for the future of your children. In addition, this insurance is also very suitable for those of you who have a need for large insurance costs, but the ability of the budget is very limited.
So, why is this insurance necessary for you to choose?
When it comes to premiums, term life insurance is a type of life insurance that is quite affordable. Therefore, this insurance is still quite a target for many people, because it is considered economical in the pocket. Although relatively affordable, this insurance can provide maximum protection.
Big Sum Insured
In addition to the premium, you also have to know about the sum assured (UP). This sum assured is the money you receive as a policyholder. You also need to know, that the sum insured from term life insurance can be up to billions of rupiah in value.
So, if you as the insured dies during an active insurance contract, then the family you leave behind will get a large sum insured.
However, although this type of term life insurance has a fairly large sum insured, you can also lose the premium you have paid so far. This can happen if you do not experience illness and die in good condition, then the premium will be forfeited until the contract period is over.
Lifetime Life Insurance
Term insurance with a lifetime is commonly referred to as whole life insurance. This whole life insurance will provide life protection protection which has a validity period of up to a lifetime. This type of insurance will certainly be given to you as a policy holder as long as you are still active and have not died.
However, this whole life insurance applies a maximum age limit for coverage. This life insurance will be returned with the total amount of premium that you have paid previously.
This payment is also added to the interest every year that is given to you. If you do not make a claim on the insurance, then your premium will not be lost.
You can use this type of insurance for expenses in old age or it can also be used together with your family. If indeed you have died and have not made a life insurance claim, then you don’t need to worry because your insurance is completely handed over to the remaining family members.
That way, the family you leave behind will not experience difficulties and have to bear your financial burden because they will receive the life insurance protection that you previously had.
Term insurance with a lifetime is highly recommended for those of you who don’t have dependents and want to get benefits from the insurance itself. So, you will not only get death benefits, but also other coverages.
Another advantage of this lifetime life insurance is that you can use it as long-term savings or emergency fund savings. So, what is the difference between this life insurance and term life insurance?
When compared to term life insurance, whole life insurance has a much higher premium value. In fact, its value can be more than doubled. If so, then it will all depend on your needs.
The reason why the premium value of whole life insurance is high is because the life expectancy of the people is quite high. So, the possibility of existing insurance claims before the protection period runs out will also be high.
You also need to know that the premium you have paid will not be forfeited if it is not claimed. And if your contract is up, the sum assured will be returned to you in its entirety. However, this depends on each insurance company.
Have Many Types of Policies
If you already have whole life insurance, then you should know in advance the types of policies offered by this whole life insurance.
In this direct policy, the premium will still be paid until you as the insured person dies or until you are 100 years old.
Limited Payment Policy
This policy is very suitable for those of you who want to get lifelong protection. You can also choose this policy if you don’t want to pay a lifetime premium. So, this one premium will be paid according to a certain period of time or a certain age.
Policy Not Participating
This non-participating policy is a policy that will only apply if you as the insured dies and your heirs receive a limited amount of basic sum insured. So, there will be no bonus that will be given by the insurance company.
This participating policy is a policy that provides benefits for you as the insured and for the insurance company itself. However, you need to underline that there will be an additional premium that you have to pay. So you will continue to get additional bonuses every year.
For term insurance with a lifetime, this will give you insurance money that comes from the premiums that you have paid so far.