The Buyt Desk
The recent pandemic has made everyone understand the significance of insurance. The result of the same is an increase in the percentage of insurance buyers.
The industry has witnessed a boost in insurance buyers in India by 11%. However, many still don’t know the difference between term and life insurance. This article has covered the key difference between term insurance and life insurance. There are nine points on which both differ.
Loan Premium – The term insurance plans are a hundred per cent protection plan. On the other hand, the life insurance plan, alias endowment insurance plan, is a mix of protection and saving. Therefore, the premium of both plans varies. The term insurance plan has a lower premium value than a life insurance plan.
Maturity Benefits –If the policyholder of the term insurance plan does not meet with any unforeseen situation during the policy term, he would not receive any amount. On the other side, the life insurance plan gives maturity benefits and bonuses if applicable.
Death Benefits – If the policyholder dies during the policy tenure, the nominees will receive the sum insured in the term insurance plan. However, in the life insurance plan, the nominee gets the sum assured in addition to the accrued bonus if applicable.
Medical Facility – In term insurance, the cost for covering high risk is low. Thus, the medical requirements are more strict in this case. On the other hand, the conditions for medical treatment in the life insurance plan are comparatively easy.
Super value and Cash Value – The life insurance plan also has a saving plan, which makes the life insurance plan a default saving plan having risk cover benefit. In the life insurance plan, invested money grows.
There is no such provision present in the term insurance. It does not have the surrender value and cash value.
Loan Facility – You can’t take a loan against a term policy. It is not the case with the life insurance policy. After the waiting period, the policyholder can take out a loan on its behalf. The waiting period usually is three years.
Coverage – Term insurance plans come for a period of time. Life insurance has no such provision. A life insurance policy like whole life insurance offers lifetime cover.
Bonus – The life insurance policy has a bonus benefit, which policyholders get at the time of maturity. The insurance firms invest the premium received from policyholders at different places. It distributes the profit earned among policyholders as a bonus.
It is not the case with term insurance. Policyholders do not get any benefit, except the high-risk cover at a low cost.
Goal-Based Planning – The saving facility of the life insurance plan can be used as an investment for future goals, such as retirement goals, child education, travel and other similar goals.
What Experts have to say about term insurance Vs Life insurance
Experts advise that every citizen must get insurance coverage, whether term or life. The term insurance is beneficial for those who have dependents, while life insurance could be worthy for those who want to save for the future or have some financial goals to establish.
