Term Life Insurance: Pure Protection

What it is: Coverage for a fixed period (e.g., 10, 20, or 30 years). Pays a death benefit if the insured passes away during the term.

Benefits:

• Affordable Premiums: Much cheaper than whole life for the same coverage amount.
• High Coverage: Ideal for replacing income, covering loans, or securing children’s education.
• Simple Structure: No investment component—just protection.
• Flexibility: Can be laddered or customized to match life stages (e.g., till retirement or kids’ independence).

Best for:

• Young families with dependents
• People with loans or financial obligations
• Those seeking maximum coverage at minimal cost

Whole Life Insurance: Protection + Savings

What it is: Lifetime coverage with a savings/investment component (called cash value).

Benefits:

• Lifetime Coverage: Guaranteed payout whenever death occurs.
• Cash Value Growth: Builds savings over time, which can be borrowed or withdrawn.
• Tax Benefits: Cash value grows tax-deferred; death benefit is tax-free.
• Estate Planning: Useful for legacy creation, wealth transfer, or funding trusts.

Best for:

• High-net-worth individuals
• Long-term wealth planning
• Those wanting forced savings with insurance

Quick Comparison Table

Hybrid Tip for Indian Families

You might consider:

• Term plan for protection (e.g., ₹1 crore coverage)
• ULIP or endowment plan for savings and goals
• Whole life or pension plan for retirement and legacy