Knowing the difference between Term Insurance vs. Life Insurance can boost your financial protection
Life insurance is synonymous with protection, as it offers financial security in many ways. There are two types of life insurance plans: Term insurance and traditional life insurance policies, which include Pension plan, Child plan, Whole Life plan, Money Back plan, and Endowment Plan.
Author:IndiaFirst Life | Date:19 Jan 2023 | Time:12:59:00
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Life insurance is synonymous with protection, as it offers financial security in many ways. There are two types of life insurance plans: Term insurance and traditional life insurance policies, which include Pension plan, Child plan, Whole Life plan, Money Back plan, and Endowment Plan. There is a difference between term insurance and life insurance, and it is important to know this to see which life insurance policy benefits you the most.
Term Insurance vs Life Insurance
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| Term Insurance | Life Insurance |
| Definition | Term insurance is the most basic and affordable type of insurance that covers you for a specific term, which can range from 10 to 30 years | Life insurance is a contract in which the buyer pays a predetermined amount to the insurance company. The purpose of this purchase can vary, but most people buy insurance to earn returns, grow savings, save for retirement, pay for a future goal, or to provide financial compensation in case of the breadwinner’s unexpected death
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| Risk Covered vs. Savings | The plan only offers a death benefit to the nominees, in case of the policyholder’s death during the policy term. There are no maturity benefits or bonuses that can help grow wealth
| Some of these plans have both, investment, and insurance. Investment component creates a corpus which helps grow savings. Insurance offers death benefit, maturity benefit and bonuses where applicable |
| Flexibility | The policy and benefits lapse if a premium payment is missed. But it can be renewed by paying the missed premiums and reinstate your policy benefits.
| Maturity benefit is paid out if all premiums are paid and the policy tenure is completed. If the policy is surrendered midway, you lose the saving component and only a part of the premiums paid are paid back. Closing the policy is not an easy process and the policy cannot be converted into another plan
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| Premium Amount | Premium amount is affordable and offers a higher coverage for a minimal cost. The premium amount is fixed and stays the same over the entire premium paying term | The cost of premiums varies depending on how much coverage you need. The returns earned are dependent on current market conditions. |
| Tax Benefit | You can get tax deductions of up to ₹ 1.5 lakh under Section 80C of the Income Tax Act. Both the premium amount and the death benefit are exempted | You can get tax deductions of up to ₹ 1.5 lakh under Section 80C of the Income Tax Act, on the premium paid and maturity benefit. |
Now that you have understood the difference between term insurance vs life insurance, you can explore both these types of insurance in detail to give your loved ones the added benefit of savings with security.
BY
IndiaFirst Life
Headquartered in Mumbai, IndiaFirst Life Insurance Company Limited (IndiaFirst Life), with a paid-up share capital of INR 663 crore, is one of the country's youngest life insurance companies. Our key differentiators are our simple, easy-to-understand products that are fairly-priced and efficiently serviced.We offer a diversified suite of over 46 need-based products & Riders (as of 31st March 2022) catering to varied customer segments, leveraging multiple distribution capabilities and augmenting various investment options. In all, propositions under the categories of Protection, Assured Savings, Wealth, Pension, Health and Group Funds for Employee Liabilities form a complete suite of offerings that help our customers prepare for the certainties of life. Our products are easy to understand and competitively priced with risk management being our core strength.
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