Life Insurance vs Term Insurance: Many terms like Life Insurance, Term Insurance, Whole Life Insurance are heard, but if you are going to take insurance then you should know the basic difference between them.
Life Insurance vs Term Insurance: Insurance is considered very important in financial planning, because the savings you are making or investing can be lost in case of emergency in the absence of insurance. But generally people do not understand insurance very deeply. Many terms like Life Insurance, Term Insurance, Whole Life Insurance are heard, but if you are going to take insurance then you should know the basic difference between them, especially between Life Insurance Plan and Term Insurance Plan.
What is Life Insurance?
Life insurance plans insure you and your family in case of sudden death. In this, after the death of the policyholder, his family members get financial security. In this you and your family get life-long coverage. In most plans you get death benefits, maturity and survival benefits. For this you have to pay premium for a period. Life insurance is perfect for long term protection.
What is Term Insurance?
Term insurance plan is an insurance plan that gives you risk protection for a fixed period. This is a more affordable plan, which can be purchased for a fixed period. Most term insurance plans have a minimum sum assured, which means that even if you do not make any claims during the coverage term, you will still get this amount.
Life Insurance vs Term Insurance: What is the difference and where is the benefit?
2. There is a big difference between life insurance and term insurance. Be it benefits or premium.
1. Difference in death benefits
In term insurance, death benefit is available only in case of death of the policyholder during the term tenure itself, that is, if the policyholder dies during the term itself, then in such a situation the insurance company gives the amount of death benefit to the nominee. If this does not happen, then after the end of the tenure, the entire investment amount is returned to the policyholder after deducting tax.
In life insurance, you get the benefit of both protection and investment. On this you get the benefit of both death and maturity benefit. Although the maturity amount of life insurance may be much less than the death benefit amount of term insurance, but yes you get the option of return on investment along with life protection.
2. Difference in premium
In term insurance, you get bigger coverage at a lower premium rate. In this, factors like your age, health, policy tenure and sum assured are considered. The earlier you buy a term plan, the lower the premium rate you have to pay. On the other hand, the premium in life insurance is much higher. The returns received on life insurance are also low.
3. Maturity Benefits
These two plans are completely different from each other in maturity benefits. In term insurance, you do not get any separate maturity benefit on maturity. However, there are some term plans like Term Return of Premium Plan or 100% Refund Premium Plan, on which you get the premium back in the end. In most life insurance policies, you get maturity benefit.
