Curated By: Business Desk
Last Updated: August 11, 2023, 12:16 IST
Insurance plans not only help you multiply your wealth but also provide security to your family. It can help you save money on your yearly taxes too. Insurance can be attractive to many people, but some feel burdened to pay a fixed amount every month for a certain period. There are various insurance policies available for different purposes. The most common ones are term insurance and life insurance. If you are also planning to get insurance, you need to know the difference between term insurance and life insurance.
Term Insurance
A term insurance plan provides a specific amount for a specific period. The policyholder is required to pay a premium, but will not be paying any other amount during the term. For instance, at the time of the untimely death of the policyholder, the insurance provider is liable to pay the death benefit amount to the nominee. If the policyholder is still present, no maturity will be provided during the term.
Life Insurance
It is a great way to protect your family in case of an emergency or sudden demise. It can help you build a financial structure and provide your family with financial security. It helps you design long-term coverage. If the policyholder has a premature death or illness, it can help with funeral expenses or other medical expenses.
What’s the difference?
Term insurance is said to be more affordable and has an assured minimum sum, whereas life insurance is about knowing the exact coverage you will purchase. A term insurance policy gives you more returns for less premium; on the other hand, if you discontinue your life insurance, you receive only the amount that you had deposited as a premium. If you stop paying the premium for your term insurance, then the policy will be discontinued.
Which is a better option?
It entirely depends on your plans. If you are looking for a short-term plan, it is advisable to choose term insurance, as this will help you save a lot in the amount of premium. If you are looking for long-term and lifetime coverage that also provides cash value, then life insurance is a better option for you. It is suggested to always plan and research before choosing any plan.
