Selecting a suitable life insurance plan requires understanding policy types, benefits, and limitations, especially when multiple policy options are available. For individuals seeking financial protection and long-term security, two major options stand out: increasing term life insurance and whole life insurance. Each has unique features, benefits and considerations. Understanding the differences between term and life insurance is important before making an informed decision. This article describes increasing term vs whole life insurance, and compares their overall benefits and features.
Life Cover Starting @ just ₹18/day*
Change Your Policy Term
As per your life stage and commitments
Hassle-Free Claim Settlement
99.38% Claim settlement ratio*
Smart Income Tax Savings
Save up to ₹54,600* on your taxes
Increasing term life insurance is a form of term insurance which provides an increasing sum assured, typically at a fixed percentage. The growing coverage helps offset the decreasing value of money over time, helping maintain the real value of life cover in line with inflation.
Whole life insurance provides coverage for the entire lifetime of the insured, as long as premiums are paid. Unlike term insurance, it builds a cash value, which can be borrowed against or withdrawn, making it a form of savings as well.
Understanding the key distinctions between these two options will help you choose the best coverage for your circumstances and financial goals.
| Feature | Increasing Term Life Insurance | Whole Life Insurance |
| Coverage Duration | Fixed term (e.g., 10–30 years) | Lifetime |
| Payout | Only if death occurs during the term | Guaranteed death benefit |
| Premiums | Generally lower; may be fixed even if coverage increases | Higher, but fixed or variable |
| Cash Value | No | Yes – includes savings component |
| Flexibility | Limited | Moderate (can borrow against cash value) |
| Ideal For | Short-to-medium-term needs | Long-term financial planning |
Increasing term life insurance is more affordable than whole life insurance. This makes it suitable for young individuals or families who want financial protection but have limited budgets.
Over the years, insurance protection has increased to help deal with rising educational, housing, and health expenses. Due to this return factor, the policy can provide financial protection as time progresses.
These policies are easy to understand. There is no savings or investment involved, making it a good option for people who only want insurance coverage.
Once the policy ends or is cancelled, you do not receive any money back. There is no savings element built into the plan.
If you outlive the term and do not renew the policy, you will lose your life cover. Renewing at an older age may cost significantly more.
With Whole Life insurance, you are covered for your entire life. The death benefit is payable as per policy terms, provided premiums are paid regularly.
Besides offering protection, whole life insurance also grows your money slowly over the years. A portion of your premium builds up as cash value, which you can borrow or withdraw if needed.
Your premium stays the same throughout your life. That means easier planning and no stress about rising costs as you get older.
Whole life insurance can be quite expensive compared to term plans. If you’re on a tight budget, it might not be the most suitable option.
These policies come with a savings or investment component. Thus, they can also make the policy harder to understand. You may need advice from a financial expert to manage them properly.
If you cancel the policy in the early years, you may lose a large part of the money you have paid. The surrender value tends to be lower than expected in the first few years.
Many individuals ask: term vs life insurance – which is better? The answer depends on your financial goals, current life stage, and budget.
Here’s what Indian buyers should keep in mind:
Rising inflation can affect the real value of life insurance coverage over time. Increasing term insurance directly addresses this by automatically increasing the sum assured at regular intervals.
Both types of policies offer tax deductions under Section 80C and maturity/death benefits under Section 10(10D) of the Income Tax Act.
Only whole life insurance allows you to borrow against your policy, which can help during financial emergencies.
If you're planning for your child’s higher education or a future inheritance, whole life insurance may be more appropriate.
There's no single right answer when it comes to choosing between increasing term life insurance vs. whole life insurance. Your decision should align with your life goals, dependents’ needs, and ability to sustain premium payments. Increasing Term insurance is cost-effective and provides high cover, especially useful in early career stages. Whole life insurance, on the other hand, offers lifetime protection, savings, and peace of mind for long-term planners.
1.7K Linkedin Followers 
Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
Products 
Company
Legal
Support
Car Insurance 
Bike Insurance
Health Insurance
Group Health Insurance
Travel Insurance
Life Insurance
