What Is The Difference Between Term Insurance And Life Insurance - Are They The

Posted by amrina alshaikh on December 23rd, 2019

In today’s world, things have become more uncertain in the way we are leading a fast-paced life. You must have an insurance cover to meet with unpredictable emergencies that life throws up at every round and bend. It is essential to choose the right insurance policy for you. The choice depends on so many factors and considerations. You have to consider time, age, number of persons to be insured, amount coverage, and fund available to pay the premium. Term insurance and Life insurance are two different insurance covers and both have a blend of merit and demerit.

If we talk of the death benefit, a term life insurance provides the only death benefit. Under term life insurance, your dependents will receive payments in case you are no more. Term life insurance is just the for a reassurance to you and your family that if something happens to your life, your dependents can go on living their lives without any financial shock that comes in when an earning member of a family dies. Term life insurance is not an investment option. A life insurance policy gives you death benefit as well as a promise of payment on maturity of the policy. Death is not the only component of this policy unlike term life insurance.

The amount one gets on maturity differs between life insurance and term insurance. Under term insurance, the amount is much higher in the event of death than the amount given by life insurance cover. Many people prefer life insurance compared to term insurance due to the dual benefit it provides. But one should have a combination of term and life insurance because term insurance death benefit is much higher and the premium is much lower than what you pay for life insurance cover.

If one doesn’t have enough resources to pay for a higher premium, and if one is more concerned about death benefit, one should choose a term insurance plan. On the other hand, if one wants to have a good return on an investment after a stipulated period and want it while one survives, one should go with a life insurance plan.

A term insurance plan is more flexible than a life insurance plan. A term insurance plan can be terminated the moment you stop paying your premiums. If you exit a life insurance plan before maturity by stopping the premiums, you won’t get the maturity amount. You will receive only the amount paid as premium with some deductions.

These are the differences between term insurance plans and life insurance plans. Ideally, you should have both the then for you because of the reasons cited above.