Frequently Asked Questions

Whole Life versus Term Insurance: Which is better?

Life insurance policies have been primarily designed to offer benefits to the family on the demise of the policyholder. However, there are many types of policies in the market; each catering to a particular set of needs. The most popular broad categories are whole life and term insurance.The former comes with a cash value account, while the latter offers protection for a defined period of time. Such an account helps build funds within the tenure of the policy.

Think of the related difference as renting versus ownership. For instance, term insurance feels more like renting a house, while whole life cover is like owning a home.

1. What is Term Cover?

This type of plan is considered to be the most economical choice. This product offers pure protection, designed to shield you from any unanticipated circumstances. This is most suitable for those with recurring or chronic health issues. There are usually three types of cover under this category – level benefit, decreasing benefit and increasing benefit.
a.	While opting for this plan, the first thing to check is the sum assured.
b.	You can calculate the sum assured based on lifestyle, current debts and medical conditions.
c.	On the death of the insured, the sum assured can be used to repay any outstanding debt.
d.	Term insurance usually does not come with maturity benefits. However, a few companies offer such add-ons. These are called riders.
e.	Riders on term policies can give the option of premium on maturity. So, if the insured survives maturity, he can claim the amount for himself.

2. What is Whole Life Insurance?

Whole life cover is more like a well-defined financial investment. It offers security throughout the life of the individual. It sometimes comes with an age ceiling limit as well, where 100 years is the usual upper limit.
a.	The insured needs to pay the agreed premium amount every year or month, as decided.
b.	Out of the paid premiums, a portion will go towards building the protection aspect. The remaining will be invested. On the occurrence of profits, the insured will be eligible for a bonus.
c.	This investment also grows in worth. So, if the insured withdraws, surrenders the policy or lives up to maturity; the investment is returned at the sum assured value.
d.	In case of the policy holder’s death before maturity, a designated nominee will receive the sum assured.

3. How to make a choice?

It largely depends on the stage of life. A term insurance policy suits an unmarried individual. A term policy with a rider will suit a married person under the age of 40, with two children. On the other hand, a whole life insurance plan will suit a married person, over the age of 40, with grownup children.

* Applicable only for the NRIs when they will visit India
# For monthly mode, 3 months premium is o be paid in advance and renewal payment is allowed only through Auto Debit or Standing Instructions (where payment is made either by direct debit of bank account or credit card)
** in multiples of 100
^ Tax benefits are as per income tax & is subject to change from time to time. Please consult your tax advisor for details. You may visit our website for further details: http://www.sbilife.co.in/content/2/3672#5

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For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale. Tax benefits, are as per the Income Tax laws & are subject to change from time to time. Please consult your tax advisor for details. Insurance is the subject matter of solicitation. Trade logo displayed above belongs to State Bank of India and is used by SBI Life under license. SBI Life – eIncome Shield, UIN: 111N105V01, a non-linked, non-participating, decreasing cover term assurance product. Registered & Corporate Office: SBI Life Insurance Co. Ltd, Natraj, M.V. Road & Western Express Highway Junction, Andheri (East), Mumbai - 400 069. IRDAI Registration no. 111. CIN: U99999MH2000PLC129113. Call Toll Free No. 1800-22-5354 from 9.30 AM-7.30 PM on all days or email at online.cell@sbilife.co.in & Visit us at www.sbilife.co.in or Email: info@sbilife.co.in

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